Today marks the 8th anniversary of What’s 🔥 in Enterprise IT/VC! Time has truly flown by, and I'm grateful to all who spend part of your Saturday morning with me. When I started this journey, I only expected it to be a great way for me to pause, reflect on a hectic week, and share my thoughts. It turned out to be almost a meditative experience, sitting here with my coffee ☕, slowing down, and contemplating the past and upcoming week. Thank you again for joining me on this adventure as we decode patterns both new and old. As we all know, history often repeats itself, and a headline from Techmeme eight years ago says it all.

We could easily change the date from October 19, 2016 to October 19, 2024, and no one would even notice! Here’s a clip from a live interview I did with OG Brent Leary this week talking about AI, and why I’m more excited than ever about the future (full interview here).

Since we’re on this thread of what’s old is new again; there is no better example than Palantir which now trades at a bubble like 28.4X NTM Revenue 🤯!

But Palantir is on to something - always deemed a services company, how did it take its model of FDEs (forward deployed engineers) and become a product company or more like a product company? For those interested, this post from Nabeel Qureshi who worked at Palantir for years is a banger!

I also wrote more about the Bootcamp model from Foundry (BLG 🤣) here:

What’s 🔥 in Enterprise IT/VC #406 Ed Sim · Aug 10 Read full story

I also encourage you to watch this video - this process is just institutionalized after having done it for years. BTW, I’ve seen so many companies never escape the services loop but Palantir’s forward thinking, and model has allowed it to build a true product platform.

Finally, one other secret from Nabeel’s post is access to data, how to get it and how to secure it. Founders, think long and hard about this.

👇🏼 this from Morgan Stanley CIO Survey in Q3 highlights why 22% of CIOs still have not allocated 💰 to GenAI projects - lack of skills is 42% No surprise that Accenture bookings 10x from $300M to $3B in 1 year. This is also why just “solving the problem” end to end requires some bodies to fix hallucination issues, get access to data faster, build trust, and more.

As always, 🙏🏼 for reading and please share with your friends and colleagues. Here’s to another 8 years together!

Scaling Startups

#reminder of what a VC’s job is - all about the 10x+ winners - find them, return 10X+, and make sure you put more of your 💰 into these companies from initial check to subsequent rounds…don’t worry about failure as the difference between Top 5% of funds and bottom quartile is negligible!

#so how do you find those winners from Inception? I must say Chris Vasquez had me all 🔥 up here…lessons from 28 years of partnering with technical enterprise founders condensed to 1 hour!

2 minute highlight:

Full video here:

#it’s not just the absolute $ amount but also momentum - momentum matters - investors want to know if they are coming in, that is for those who don’t invest on vision alone, that things are inflecting vs. steady or flat - startups are always expected to grow fast because eventually due to the law of large numbers, growth rates eventually slow

#the most successful startups are not always 📈 - must watch 5 min clip on Snyk journey to multi-billion valuation

#❤️ this

#Miami 🌴 is a great place for 🇮🇱!

#The valley of death between Series A to Series B? So many reasons - no revenue and high valuations killed many a company, others have so much cash don’t need to raise, and yeah, most just don’t have a repeatable GTM model in which to deploy capital so no takers. Only 9% make it to the B round in 2 years, down from 27% pre-ZIRP 🤯

Thanks again to Peter Walker from Carta

Enterprise Tech

#must listen BG2 pod with Brad and Jensen from Nvidia - here’s a clip - listen to these 3 minutes on why critics are so wrong that we aren’t overbuilding capacity and what the future holds - every application is machine learning based and on top of that agents doing work - digital employees…a trillion dollars of data centers need to be modernized on GPUs!

#and amazing clip from BG2 Pod with Jensen Nvidia talking about Market makers as much larger opportunity than share takers! Watch below…

#2024 Accel Euroscape - great report from Philippe Botteri and team at Accel London

Accel is excited to release today the 2024 Accel Euroscape: AI Eating Software, summing up the AI & Cloud developments of 2024 and unveiling our list of Top 100 AI and Cloud companies emerging from Europe and Israel.

**Highlights**
- AI driving value creation in the tech public markets and driving the recovery of venture funding, up 27% vs. 2023 
- 2/3 of AI private funding is going into the top 6 companies in each region 
- 3 genAI Leagues emerging: The Tech Titans, The AI Majors and the AI Challengers: who will win the race.

👀

#so much noise in enterprise space, that many apps that start consumer ultimately know that b2b will help pay the bills - from ChatGPT to Perplexity (see below)

to Google NotebookLM this week

#IDPs (Internal Developer Portals) are a thing - on heels of huge Series C by Cortex, Port raises $35M Series B - and yeah, it does have an AI twist (CTech)

Port raises $35 million Series B as demand for DevOps solutions soars
The Israeli startup said its annual revenues have increased sevenfold over the past year, while its user base has expanded eightfold, with customers including companies such as LG, GitHub, and British Telecom.

In addition to the fundraising, Port also announced the integration of large language models (LLMs) into its platform. These tools enable organizations to embed AI capabilities directly into their custom developer portals. Popular uses of these tools include fault investigation through natural language search and analysis, automatic generation of clear error messages from documentation, and recommending relevant internal resources to developers based on the feature they are working on.

#more AI generated code = more need for AI assisted code review - check out Baz from one of cofounders of Bridgecrew (sold to Palo Alto Networks)

#Morgan Stanley Q3 CIO Survey - 22% of CIOs say that AI has had no impact on budgeting thus far and here are the reasons, none of which are a surprise and will only get better over time

#Besides coding, customer support is the number 1 use case for GenAI - now read the definitive study on CS pricing from Kustomer (a portfolio co) - some surprising conclusions - and looks like the world wants to move to a cost per conversation model - check it out

#good read on limitations of transformer models today and what’s next “This AI Pioneer Thinks AI Is Dumber Than a Cat” WSJ

LeCun thinks that the problem with today’s AI systems is how they are designed, not their scale. No matter how many GPUs tech giants cram into data centers around the world, he says, today’s AIs aren’t going to get us artificial general intelligence.

His bet is that research on AIs that work in a fundamentally different way will set us on a path to human-level intelligence. These hypothetical future AIs could take many forms, but work being done at FAIR to digest video from the real world is among the projects that currently excite LeCun. The idea is to create models that learn in a way that’s analogous to how a baby animal does, by building a world model from the visual information it takes in.

The large language models, or LLMs, used for ChatGPT and other bots might someday have only a small role in systems with common sense and humanlike abilities, built using an array of other techniques and algorithms.

Today’s models are really just predicting the next word in a text, he says. But they’re so good at this that they fool us. And because of their enormous memory capacity, they can seem to be reasoning, when in fact they’re merely regurgitating information they’ve already been trained on.

“We are used to the idea that people or entities that can express themselves, or manipulate language, are smart—but that’s not true,” says LeCun. “You can manipulate language and not be smart, and that’s basically what LLMs are demonstrating.”

Markets

#when I first got into the VC biz 28 years ago, we were looking at 8ish years…now 👀

#JFrog is next public enterprise software target for PE? BTW the implied forward multiple on $3.4B and projected $424M of revenue is 8x forward which is not too shabby (Bloomberg)

Software Tools Maker JFrog Attracts Takeover Interest
* PE firms including Permira, Hellman & Friedman are eyeing firm
* JFrog’s share gains Friday raise market value to $3.4 billion