Speaker unverified: prediction

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…I was joking over Toby at Shopify one time that you know you find a cynical engineer and like are you just a database in the cloud you're like kind of. Yeah I mean I was like look I mean kind of under cells the decade plus work I put into this database of the cloud yeah kind of is if you look at software as a service reductively it is a database in the cloud with a lot of workflows on top and what agents will end up doing is those workflows and so you know I haven't done a lot of work on ERP systems but if you just imagine you know the procurement processes and you know contracting and all the things that sort of make up at them and the Ernst & Young auditor using it to you know audit your financials for a quarterly earnings report how much of that will be AI agents and then what is the value of that platform when the forums and fields and the web browser aren't used very much anymore not nothing I actually think that ledger that you know the the balanced books that you have is actually quite useful so it's not zero and then similarly yeah could the company who made the forums and fields in the web browser and make the agents yeah I could definitely see that. The thing that we've seen just time and time again technology though is you know there's all the fancy names for innovators dilemma crossing the chasm I can't remember what they all mean anymore but you know effectively when you're an incumbent you sort of become addicted to your product and business model and as a consequence when there's a big platform shift underneath you you end up usually with a graveyard of companies who usually for business model reasons couldn't make that transition seabull systems with on-premises software relative to some company like Salesforce you could see the you know companies like Microsoft you know had fits and starts with the internet and cloud and came out quite strong and so if you're big enough you get multiple out that's you know with with these transitions so my guess is we will have a few stories you know maybe maybe a such a level story of a company that came out even stronger on the other side of it and we'll have some stories like seabull systems you know of companies that saw the slow motion car wreck in front of them and couldn't turn the wheel fast enough just because of the natural gravitational forces that they keep large companies from from innovating the thing that I feel really grateful to have briefly been you know a public company CEO because you really feel those gravitational forces you know it's investors say they're long-term and every single quarter you go out and you get a report card you know on on your business and you know I have so much admiration for people like Sean to do at Adobe who went through that transition from perpetual license software to routable revenue it's so much a craft and like true business model transitions it changes your balance she changes your like accountings like all of a sudden you look more or less profitable even though I was laughing about accounting it's like it's like the cash flow is the same but all these numbers shift around and then on top of you have to have sudden you look more or less profitable even though I was laughing about accounting it's like it's like the cash flow is the same but all these numbers shift around and then on top of you have to have be a great storyteller and bring your employees along with you your investors along with you your your your customers along with you it's formidable I'd say I said you know I think a lot of entrepreneurs are like yeah we're gonna you know disrupt the incumbents that actually sort of funny having sat in that seat for a while I have a ton of empathy and I think some great leaders will come out of this and and just like the reputation such a house for transitioning Microsoft into the Azure cloud era but it is absolutely not a fair going conclusion in fact I think you know for most of these incumbents the defaults will be that they will be disruptive they don't embrace you know where software is going you've talked about this in the past and you kind of alluded to it there but the the business model elements of it seem far harder with all those constituencies you talked about shareholders and employees and customers and just managing expectations and and taking people through all the acco unting and EOS secreties it seems like that in your mind is even more challenging than the technological elements without question in my mind actually I don't at there are points where technology is really hard you know in 1995 is really hard to make a scalable website you know and like the modern practices I don't think like you know things like men cash didn't exist and you know just getting databases to scale was a big deal and I was talking to someone who worked at Oracle when Salesforce was starting and they're talking about multi-tenancy in a database was like a novel concept so yeah it's I don't even minimize the technology but you don't need to be a AI researcher to see like making agents that work somewhat effectively will get really easy relatively soon it's really hard right now and just technology will improve so how you actually build a product that's useful for stakeholders one thing but then what is the business model and the the reason why it's hard to make a business model shift is just the change management of that so if you're a any SaaS company in your portfolio I'm probably has the same incentive structure which is you have your annual recurring revenue and sales people get incentivized to increase it and you might have a team that is incentivized to reduce attrition so you're sort of adding to your annuity and you're trying to keep keep attrition down so you don't lose money value in that annuity it's kind of how all all software is a service company's work okay so now think about it from the perspective of on an individual account they're paying you I'll just make it even numbers they're paying you a million dollars a year and you have a disruptive new technology that in 10 years will mean they're paying you 10 million dollars but if you roll that out that year it would go down to two hundred thousand dollars how do you actually do that if you're a public company that's really hard just because like all u 10 million dollars but if you roll that out that year it would go down to two hundred thousand dollars how do you actually do that if you're a public company that's really hard just because like all of a sudden you're going to look like your business is slowing down even though you're just eating your vegetables for a greater you know a brighter future if you're a not unprofitable or not cash low positive start up you know all of a sudden just your burn rate you know go way up if you have let's say none of those applied you're a private company that somehow is ready for all those things all of a sudden to do your employees like you know jump ship in the middle because they're betting on the the come and you just look at the transition from like windows revenue to azure active directory each one of those is a ground game at the customer by customer level to sort of transition people into that new world and it's so easy for you know armchair strategist like of course that's the correct thing to do and then the question is like well if you don't care about the messy middle yeah it's totally obvious but everyone in the world cares about the messy middle so it requires just incredibly exceptional leadership to go through those transitions and I think people don't think about it enough and and I just think in part just because the you know a lot of folks haven't really operated businesses at scale before and I've told this story before but at Google our first campus was sgi silicon graphics and we moved into their campus after they effectively were going out of business and at Facebook we moved into Sun Microsystems campus after they were acquired and sort of like summarily shut down by Oracle and like both of those companies in my relatively short career were successful companies and and build campuses and in my relatively short career at the time had gone out of business and were you know selling their campus for parts you know it was just because their technology and business model was once great and they didn't transition to the next one and that is the default for companies in our industry and there's just a very small handful of companies that have been able to move to multiple products change business models but you can list them on like maybe two hands and I think it's very important as entrepreneurs we keep that in mind because if your ambition is to create a company that outlives you which is certainly my ambition you have to create a culture that's not like a one one trick pony I've heard you talk about like the three different segments of maybe the AI ecosystem today being financial foundation models tools and then applied AI one of the questions that I think we have come up and I'm not just asking diligence questions that are someone an unanswerable but I think you said that a unique lens is where the foundation models pushing up into different applications where that's going to be true and where it might be harder to go do and you look at something like log code which is kind of saddened between being the foundation model and the actual application itself I guess where you said you have an interesting purview of both you have a…

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