This Week in Venture Capital and Artificial Intelligence

Every week I will share and summarize 3-5 ideas and insights with the LinkedIn community. Some of the summarizations I may have covered during the week, and other things may have just been passing thoughts.

1. Have you ever...

If you are a founder and you are reading this, I am going to give you my Top 5 list of "Have You Evers". These are common activities I see founders doing which I believe is much more of an anchor than a lift to their business efforts.

1.) Fundraised more than you spent time building your business

Fundraising is NOT a revenue producing activity, business development and building REAL business relationships is. Work on the latter, and I PROMISE you that you will not have any problem fundraising, because investors will find you on their own.

2.) Paid someone to design your pitch deck when you are still early stage

Tell me this, if your website is good enough your pitch deck really takes a back seat. You really never need it. If you paid someone to design your pitch deck, then your focus is way off my friend. Too many founders pay for pitch deck services when it is something they really could have done themselves. It's like using a calculator to add 2+2; you can do it yourself. I cannot think of any company I am putting into my VC portfolio that I am putting in there because of their pitch deck. NOPE. I am putting them in there because I believe they and their product can solve REAL problem and challenges for people, our economy and environment.

I have more pitch decks to than the library of congress has books. Pitch the problem, ditch the hyperbole

Also if you are going to send a pitch deck, make it mean something. Too many decks don't say anything monumental. You could just talk about solving ONE big, huge problem and how you are going to solve it, and that is good enough. Other than your character, your background, your education, your popularity and your prior successes don't mean as much as you think they do, especially if your deck is full of hyperbole.

3.) Been an early-stage startup and more than 50 percent of your budget is salary

You're an early-stager, then you're LUCKY if anyone gets any salary. Please don't go into entrepreneurship for the salary. Matter of fact, if you can convince people to come on your team for no salary until you have reached "X" amount of revenue pre - or post - investment, I think you will find more substance in your team. People who are not there just for the money. In addition, it should impress investors if you were able to get to a certain amount of revenue with zero or minimal funding and with people bought by a dream and faith.

4.) Pitched an idea that the current societal infrastructure does not support

I once had someone pitch me an idea about extracting water from one of our larger planet's water moons (names of planets excluded for confidentiality) for 1 billion dollars per gallon. Well first off, this planet's moon is about 700 million miles farther from Earth than Mars is and we have barely breached Mars

Extracting water from this moon, presents significant technological and logistical challenges, although I will say it is not entirely out of the realm of possibility, just not in the next 15 - 20 year as we barely have enough infrastructure and capability to go where we are going. Oh might I add, investors want their money back in 5-7 years or less, not 15-20 years. Our focus is on Mars and the Moon and that is just a fact. We would have to setup stations on far out areas in order to even conceive extracting water from that far away with our current technologies.

Pitch crazy ideas, don't be insane though

What's more, is this person's pitch deck and materials were so scientifically well put together that they made it believable!

To put things in perspective, I have done my calculations, and to provide enough water intake for every human on earth we would need approximately 104.3 billion gallons of water everyday. This does not even include other water needs like food production, electricity etc.

To add to the ridiculousness, at the human intake water usage needed, we would need a budget of $104.3 quadrillion enough to topple the world's entire economy.

Obviously we would extract. water in a situation like this and a very marginal level and ever-increasing pace, but just look at the outlandishness of it.

Pitch crazy ideas, don't be crazy though!

5.) Failed to measure intangibility

A lot of startups fail because they only measure the tangible and things they can see. Yes measure things you can see, but also what you cannot see. How do you measure procrastination? How do you measure things you cannot see? It's tough but it can be done.

When you measure intangibility, it's not a preciseness but rather it is much more of an abstract concept. It's a feeling. It's a way of life.

The only way to measure intangibility, is to always be doing your part. My Father used to always say, running a business is like running a family.

A lot of startups just have people who are quite frankly, OUT OF LINE!

It very much so is. Think about that. I have seen and experienced REALLY well-run families who are pretty tight knit. Much of what makes them run well is not how they measure things like the bills, but it is how they interact together and do as individuals and as a unit. Just like a Marine unit, everyone must do their part. Yes we measure everything, but you can't measure ribbons down to the millimeter on a chest when you are on the battlefield.

Trust me, as a Marine, if you're not doing your part, everyone will know it, and you will get a boot to your chest, no matter your rank. Rank has its limits when lives are on the line; if you are out of order then you just are.

In other words, a lot of startups just have people who are quite frankly, OUT OF LINE! Measure yourselves for humility, for adaptability, for resilience, for dependability, for integrity and so on.

2. I'm not here to play it SAFE

I am not here to play it safe as an investor, I am here to make educated bets and take vetted risks.

This is why I dislike SAFE notes. To me a SAFE note just says that both the founder and the investor both lack confidence in the deal.

Here are some of the typical parameters of a SAFE note.

1.) Too vague and not enough explicit factors leaving the deal way too open - ended. Could lead to a bad deal for either the founder, or the the investor, or both.

2.) No incentive for the investors and no accountability for the founders.

3.) No Valuation. Why would I want to commit capital to something that has no value!

4.) Too much valuation exaggeration. If the valuation was nonexistent or wasn't good enough for me to come in and commit at a reasonably priced valuation then why would it be good enough for me to reserve a commitment and hold out my capital for something that may actually never happen. Valuations need to be set and arranged from jump street to prevent things from getting out of control. This is the same thing that happened during the bank collapses of 2023. SAFES really are just a springboard to inflate valuations of companies that are essentially cubic zirconias in the making i.e. not real diamonds

My suggestion is that you might as well go with debt or a straight equity investment. If you make a deal that fails, a SAFE won't save the investor from losing their money, or the founder from never raising capital again.

3. What makes companies successful at first but fail later

I always loved the story of Blockbuster vs Netflix

I actually went to Blockbuster's website and took this screenshot below. Wow! Even the statement "we are working on rewinding your movie is antiquated" truly cementing their legacy as a relic of the past. But it doesn't have to be you. Read on...

How does a market behemoth like Blockbuster take the long fall? By not listening to the market. By not listening to their employees? By not taking risks? By adopting complacence? Not accepting when a newcomer is just better and adopting their approach? It is certainly a combination of those things and more.

But I think it has to do with the difference between doing things that seem productive vs things which actually are productive.

I want to transition over to AI.

Have you ever asked yourself, "why are humans building AI?"

None of us agreed to this AI society, but rather we were just served it and accepted it because social uniformity eventually forced us to. So now today AI is how we make money and build businesses and survive. Most people are just "surviving". Most people are not intentionally living their lives. I think a lot of us would agree when we see the incessant scrolling on Instagram and the addictive gamers, reality TV show junkies, job vaults and empty entrepreneurs with no conviction. So I ask the question "as people and as companies are we building AI to be productive or to seem productive"

I would like to see AI companies emerge outside of the conventional and current classification realm where gender and race has become a forced duality to fit certain ethnicities, demographics etc. Where machine learning models are defining and structuring race and gender based on preset terms.

I don't think you can code race and gender using AI in a world where everyone wants to be anything. AI is not suppose to assume what the potential of the human existence is based on pre-defined specifics. It's the discriminate "classing" of certain critical factors and criteria that is limiting us and will cause companies to fail. This is the same thing Blockbuster did; they classed the market.

How do you code race and gender? Something so human and something that always changes depending on context, time, place and evolution. I don't think you can code race and gender using AI in a world where everyone wants to be anything. AI is not suppose to assume what the potential of the human existence is based on pre-defined specifics. It's the discriminate "classing" of certain critical factors and criteria that is limiting us and will cause companies to fail. This is the same thing Blockbuster did; they classed the market.

We are making the biggest mistake here and the companies that figure out a way to classify without pre-defined sets for their machine learning models will be the companies that really give the greatest utility to AI. So in today's age, what will make companies successful now and fail later is how they embrace AI and use it to classify from one to the next, and I think this is a good start if we look at certain classification models of race, gender, and occupational.

I hope you enjoyed this week's newsletter stay tuned for next Saturday's edition.

1. ) Upcoming - Stay tuned for:

-- Show release with Serg Masís on my podcast titled Explainable AI

2. ) Upcoming publication

-- On IdeaScale, a well-known global innovation platform I write for

You can find out more about these by tuning into my LinkedIn profile daily and peaking my CV that is listed below from time to time. Also if you would like to be a guest on my 2 podcasts, Capital Unscripted, or Explainable AI, or if you would like to be a contributor to any of the medias I write for or am partnered with, -- includes AI Accelerator Institute , Idea Scale, or AI news -- then please reach me by inboxing me.

I hope you enjoyed this week's newsletter stay tuned for next Saturday's edition.

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