DeepSummary
The episode features an in-depth conversation with Michael Eisenberg, a co-founder and general partner at Aleph, one of Israel's leading venture capital firms. Eisenberg discusses the state of AI investing, expressing his belief that foundation models are the fastest depreciating asset in history and that the current AI landscape resembles a bubble. He shares insights on who might be the biggest losers in this phase and where value could accrue.
The discussion then shifts to the topic of liquidity, with Eisenberg expressing skepticism about private equity firms being the primary buyers of software companies. He argues that IPO windows are always open and encourages founders to consider going public earlier. Eisenberg also criticizes Lina Khan, suggesting she poses a threat to American capitalism and predicting challenges for the M&A market in the near future.
Additionally, Eisenberg weighs in on the AI race between the US and China, disagreeing with the notion that China is two years behind. He suggests that AI could be a more dangerous weapon than nuclear weapons and advises European founders to leave the region due to potential regulatory challenges.
Key Episodes Takeaways
- Foundation models in AI are rapidly depreciating assets, and companies built around them may not have sustainable competitive advantages.
- Private equity firms are unlikely to be the primary buyers of software companies due to increased cost of capital and valuation challenges.
- IPO windows remain open for companies willing to accept the market's valuation, and going public earlier may be a viable strategy.
- Lina Khan's regulatory stance is perceived as a threat to American capitalism and the M&A market.
- The US-China AI race is intense, with China potentially surpassing the US in certain areas like AI-driven psyops.
- Europe's regulatory environment may hinder the development of AI companies, prompting founders to consider leaving the region.
- Younger generations may surprise with their resilience and determination in the face of global challenges, including the AI arms race.
- Only a few exceptional AI companies will achieve long-term success, while the majority may struggle to maintain their competitive edge.
Top Episodes Quotes
- “If I'm in Europe and I'm starting a company, I would get out.“ by Michael Eisenberg
- “I think younger people are going to surprise us. And this is going to be an incredible generation who's going to be forced to stand up and fight because, you know, Israel is one place, but there's ukraine, and there's more of this going on around the world right now.“ by Michael Eisenberg
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Episode Information
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
Harry Stebbings
6/19/24
Michael Eisenberg is a Co-Founder and General Partner @ Aleph, one of Israel's leading venture firms with a portfolio including the likes of Wix, Lemonade, Empathy, Honeybook and more. Before leading Aleph, Michael was a General Partner @ Benchmark.
In Today's Show with Michael Eisenberg We Discuss:
1. The State of AI Investing:
- Why does Michael believe that "foundation models are the fastest depreciating asset in history"?
- Are we in an AI bubble today? As an investor, what is the right way to approach this market?
- Who will be the biggest losers in this AI investing phase?
- Where will the biggest value accrual be? What lessons does Michael have from the dot com for this?
2. Where Is the Liquidity Coming From?
- Why does Michael believe that it is BS that private equity will come in and buy a load of software companies and be the primary exit destination?
- Why does Michael believe that IPO windows are always open? Should founders go out now? What is good enough revenue numbers to go out into the public markets?
- Why does Michael believe that Lina Kahn is a threat to capitalism? How does Michael predict the next 12-24 months for the M&A market?
3. AI as a Weapon: Who Wins: China or the US:
- Does Michael agree with the notion that China is 2 years behind the US in AI development?
- Does Michael agree that AI could be a more dangerous weapon in wars than nuclear weapons?
- Why does Michael suggest that for all founders in Europe, they should leave?
- US, China, Israel, Europe, how do they rank for innovating around data regulation for AI?
4. Venture 101: Reserves, Selling Positions and Fund Dying:
- Why does Michael only want to do reserves into his middle-performing companies?
- What framework does Michael use to determine whether he should sell a position?
- Which funds will be the first to die in this next wave of venture?
- Why does Michael not do sourcing anymore? Where is he weakest in venture?
- Why does Michael believe that no board meeting needs to be over 45 mins?