I’m back from a short trip to the Bay Area and an annual meeting for one of my LPs, where many of my discussions centered around the state of the venture market and OpenAI/ChatGPT. You can certainly feel the energy change when discussion goes from how long will this last to what else can generative AI do. These mood swings define the nature of the startup market in general; one day things can be absolutely amazing and the next not so. On the latter, Tom Loverro from IVP sums up the current market dynamic quite well. If you haven’t read the 🧵, please stop and do so now.

Tom Loverro @tomloverro

PREDICTION: There's a mass extinction event coming for early & mid-stage companies. Late '23 & '24 will make the '08 financial crisis look quaint for startups. Below I explain when, why & how it will start & offer *detailed advice to founders* on surviving the looming die-off. /1

4:59 PM ∙ Jan 31, 2023

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This is also in line with my predictions issue from 12/30 - What’s 🔥 #322.

Ed Sim @edsim

@tomloverro Nailed it! Also shared some of this in my predictions end of year. whatshot.substack.com/p/whats-in-ent…

3:43 PM ∙ Feb 1, 2023

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On the hope springs eternal side, I can’t tell you how many energizing conversations I had with founders about ChatGPT and OpenAI this week. Once again, my belief has always been that it’s a transformational technology, and if it makes sense to build it into your product because end users will benefit greatly, then by all means you should. But remember it’s a technology, and you still need to solve a problem uniquely and significantly better than what’s out there because the tech is not the moat.

Case in point: Intercom, one of the first SaaS 🦄 minted in 2018 has smartly built an efficient business and has not raised a dime since then.

Des Traynor @destraynor

🚨ɴᴇᴡ ꜰᴇᴀᴛᴜʀᴇ ᴀʟᴇʀᴛ🚨 The day ChatGPT launched our ML team got straight to work, asking how it could make @intercom better at Customer Service. Today we're announcing our first wave of features...

5:45 PM ∙ Jan 31, 2023

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and here’s a deeper technical dive 🧵:

Paul Adams @Padday

Two months ago, ChatGPT exploded onto the scene. Everyone was talking. But we needed to know if we could deliver something our customers would actually use + value. So we got building with them. It's been incredible! Today we're announcing 4 new battle-tested AI features.

4:31 PM ∙ Jan 31, 2023

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I’m sure this announcement will bring a renewed sense of excitement to the Intercom team while also from a business perspective help its end users do more with less. I’m also sure every single late stage VC on the planet is reaching out as this is a great way to have a “Chat GPT” investment 🤣

Case in point #2: Microsoft keeps cranking - even though the product is not as slick as Slack, it has significant market share and just leveled up productivity.

Shubham Saboo @Saboo_Shubham_

Big News 🚨 Microsoft just launched Teams premium powered by ChatGPT at just $7/month 🤯 With ChatGPT, Teams users can generate automatic meeting notes, AI-recommended tasks, personalized meeting templates, and a lot more!!

5:20 AM ∙ Feb 2, 2023

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Case in point #3 - Notion’s AI is finally out to market. BTW, notice similarities in all 3 products? Text summarization, auto complete, and idea generation/expansion.

Jill Metcalfe @jillmetcalfe

My first real implementation of @NotionHQ AI. I added a Custom AI block to the book template in my Library database, which creates a brief summary of the book in the title. Genuinely useful.

12:51 PM ∙ Jan 28, 2023

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We all need a shiny new object while the markets still wobble from interest rate hikes, and we sure have it with generative AI. For older startups, it can be a Renaissance to breathe new life into your organization as a cutting edge company, amp up your existing customer base, reduce churn, and reach a whole new audience like Intercom. It’s also the greatest opportunity in the opinion of many a new startup founder, and this is where I believe the trouble lies. There will be fortunes made by a few like OpenAI as an infrastructure layer, but thousands more will crash and burn chasing the next new thing.

Hope springs eternal, but tread carefully and do not forget that cool tech does not equal amazing business.

As always, 🙏🏼 for reading and please share with your friends and colleagues.

Scaling Startups

1. 👀

   

   Terrence Rohan @tmrohan

   A startup with 35 employees has an average of 102 SaaS tools.

   12:04 AM ∙ Jan 31, 2023

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Enterprise Tech

1. 🔥 up for initial funding announcement for Hypernative which is creating a new category, CryptoSecOps, to stop zero day attacks in crypto. It’s also another amazing 🇮🇱 team we’ve backed with previous experience building cloud infra and selling to IBM and Microsoft Security research. Pay attention as they keep finding hacks before they happen!

   

   Ed Sim @edsim

   @Boldstartvc we ❤️ new category creation, esp. in cybersecurity + we see same opportunity in crypto security as we saw in our day one investments in pioneers like DevFirst sec @snyksec + AI sec/MLSecOps @ProtectAICorp Here's more on why we invested:

   

   medium.comHypernative — CryptoSecOps, stopping zero day web3 cyber attacks, welcome to boldstartAs a day one partner for technical founders, we ❤️ to invest in founders building 🏗 the future of enterprise infrastructure including…...

   1:54 PM ∙ Jan 30, 2023

2. Huge - HashiCorp open sourcing it’s internal design system and internal document mgmt system which allowed it to truly be remote first - built on top of Google Docs with workflows built in

   

   Armon Dadgar @armon

   Second, is Hermes. We have a document heavy culture (PRDs, RFCs, memos, etc) and we've invested in internal tooling to make it easier to author, publish, discover, and subscribe to relevant documents.

   

   hashicorp.comIntroducing Hermes, An Open Source Document Management SystemLearn about Hermes, an open source document management system created by HashiCorp to help streamline writing and document processes....

   5:13 PM ∙ Jan 31, 2023

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3. Speaking of Hashicorp - looks like Cloudflare is building their own Vault - from Matthew Prince, founder/CEO

   

   Matthew Prince 🌥 @eastdakota

   @rmhrisk Definitely. Though we may already be building that and planning to open source it.

   12:26 AM ∙ Feb 3, 2023

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4. Netlify buys Gatsby - must read for OSS founders - 8 year journey and evolution from open source developer tool for users to company to enterprise use cases to cloud platform and now acquisition - one of the OGs in Jamstack

   To see how we got here, let’s start by rewinding back in time. Eight years ago, I was a front-end developer, and I fell in love with React. At the time, React was a tiny emerging framework for apps, but I wanted to build a website with it. So I took a week and built my own framework on top of React, called it Gatsby, published the code to GitHub and deployed my site on a service called Netlify. 

   Over the next couple of years, pull requests started to trickle and then pour in. A community started to form. I turned from a solo maintainer into the tech lead of a rapidly growing movement.

   Having come from the Drupal world, I understood the needs of content sites, and I realized we’d need not just a rich frontend toolkit, but purpose-built cloud infrastructure to make the developer experience truly seamless.

   So I worked with other Gatsby community members, including my co-founders Sam Bhagwat and Dustin Schau, to turn the open-source project into a company.  With Zack Urlocker, Gatsby’s CEO, we’ve focused on serving the needs of enterprise teams building on top of Gatsby.

5. Future of serverless…

   

   swyx 🌉 @swyx

   quick cloud hot take: Traditional serverless (eg AWS Lambda and similar) is past its prime. Future is either serverless containers (@flydotio) or isolates (@deno_land) based on usecase. There’s no benefit picking the barebones middle option for greenfield stuff in the year 2023

   4:47 AM ∙ Jan 29, 2023

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6. Building a Staging Environment for Data Teams (Orit Mansur Riskified - h/t DevOpsWeekly) - great overview of the data eng process and while similar to software development, data tables don’t have a simple version control system

   Our development stack includes the following tools and methodologies:

   We use Snowflake as our main database

   Our ETL processes are stored as SQL and Python scripts

   We use Git as a version control tool and manage our scripts in a Git repository

   We use CI/CD processes as part of our deployment

   We schedule and run our processes using Airflow

   Our BI frontend tools are Tableau and Looker

7. Need people to label and train data - OpenAI has hired an army of contractors to make basic coding obsolete (Semafor)

Markets

1. 💯 on down rounds - clean ones that is versus trying to maintain artificially high price with debt or structure - does no one any good

   

   Gavin Baker @GavinSBaker

   1) Stripe doing a clean down round is healthy for ecosystem. Many companies that raised at absurd multiples (avg SaaS deal in 21 was done at 114x ARR per IVP) will need to raise again soon. Majority will be down rounds or heavily structured. Both options should be considered.

   6:46 PM ∙ Jan 31, 2023

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