DeepSummary
The podcast features an interview with Vince Hankes, a partner at Thrive Capital who led the firm's investment in OpenAI's latest funding round. Hankes discusses his background, including his time at Tiger Global working with legendary investor Lee Fixel, and his transition to Thrive Capital. He provides insights into the decision-making process behind investing in OpenAI, including evaluating the market, assessing competition, and determining the long-term defensibility of OpenAI's models.
Hankes delves into the broader implications of artificial intelligence (AI), examining whether it represents a transformative technology shift or merely a hype cycle. He explores the potential value accrual between incumbents and startups, the open versus closed model debate, and the concentration of top AI talent. Hankes also addresses concerns about the speed at which incumbents are shipping AI products and the potential impact of regulation.
The interview concludes with Hankes reflecting on his growth as an investor, discussing his biggest investing mistakes and successes. He highlights the organizational structure at Thrive Capital that empowers the team to make bold investments like the one in OpenAI. Hankes shares valuable lessons on building trust with founders, maintaining a level-headed mindset, and adapting to the rapidly changing landscape of AI.
Key Episodes Takeaways
- OpenAI's chat GPT and other AI models have the potential to disrupt industries and create new market opportunities, but their long-term defensibility and potential for commoditization remain uncertain.
- The value of AI may accrue more to the application layer than the infrastructure layer, similar to the relative value distribution between software companies and cloud infrastructure providers.
- Incumbents like Google, Microsoft, and Amazon are quickly shipping AI products, posing a challenge for startups trying to compete directly in those areas, but startups may have an advantage in creating entirely new user experiences.
- Regulation of AI is necessary but should be done in collaboration with the companies building the technology to ensure a nuanced understanding of the technology and its implications.
- Maintaining a level-headed mindset and an open mind when evaluating potential investments is crucial, as is developing a deep empathy for the customer and the qualitative aspects of a business.
- Building trust with founders requires predictability, transparency, and a mutual understanding of decision-making processes.
- Successful investing requires adapting to rapidly changing market conditions, learning from mistakes, and continuously evolving one's mindset and approach.
- Organizational structures that foster autonomy, creativity, and psychological safety can enable bold investment decisions and facilitate a long-term perspective.
Top Episodes Quotes
- “If you're going to toe to toe right now with an incumbent on their home turf and their shipping, I think it's a hard bet to take the opposite side of, you know, in our business. But if you're creating something that's totally a different user experience that no incumbent has today, I'd bet on startup ten times out of ten.“ by Vince Hankes
- “I think regulation will come to AI and it will be necessary. I don't doubt that at all. In my mind, I think it has to be done in partnership with the companies that are building, because regulation for the sake of regulation is not going to be what solves the problems people are concerned about. You've got to go understand the nuances, you have to understand the technology.“ by Vince Hankes
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Episode Information
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
Harry Stebbings
5/3/23
Vince Hankes is a Partner @ Thrive Capital where he has led the firm’s investments in OpenAI, Melio, and Airplane.dev. He currently sits on the board of Airtable, Benchling, Lattice, and Melio. Prior to joining Thrive, Vince was an investor at Tiger Global where he learned the craft of venture from the legend that is Lee Fixel.
In Today's Episode with Vince Hankes We Discuss:
1. From Tiger Global to Partner @ Thrive Capital:
- How Vince made his way into the world of investing with Tiger Global?
- What are 1-2 of his biggest takeaways from working alongside the legendary Lee Fixel?
- Why did Vince make the move from Tiger to Thrive? How do the two firms differ?
2. The OpenAI Investment: The Memo:
- How did the OpenAI deal come to be? What were the round dynamics?
- Market Evaluation: How did Vince and the team analyze the market top down?
- Competition: Who did Vince identify as the core competitors to OpenAI?
- Defensibility: How did Vince think through the long-term defensibility of OpenAI's model? Does Vince believe these models will become commoditised?
- Price: How did Vince and the team get comfortable with the $29BN price?
3. AI: Hype or Generational Defining Transformation:
- Trend or Transformation: Why does Vince believe AI will be the defining technology of our generation?
- Startup vs Incumbent: Does Vince think the value will accrue to the incumbent or the startup?
- Open or Closed: Does Vince think we will operate in a closed (one model rules them all) environment or an open-source environment with many models?
- AI Talent: Where does Vince think the majority of the best AI talent will concentrate?
- Speed: Why would Vince be scared if he were a startup today looking at the incumbents?
4. The Changing Investor: Lessons from Good and Bad:
- How has Vince changed most significantly as an investor over time?
- What has been his single biggest investing mistake? How did he learn from it?
- What has been his biggest investing success? How did that change his mindset?
- What has Thrive done in their org structure to allow them to make bets very few other firms can do?