00:00The speed of AI development means investors trying to stay ahead of the curve also need to move faster than
00:05ever.
00:06For venture firm GV, that means focusing now on the application layer.
00:10Having already made strategic bets on AI infrastructure, chip startups,
00:13Dave Manukiello, managing partner at GV, joins us now.
00:16And GV's sole limited partner, as you may know, is Alphabet,
00:20but it invests independently without regard for Alphabet's business strategy.
00:26It was written, so I read it. Welcome to the program.
00:28Thanks so much.
00:29It's really interesting to have you here today because quite recently we covered one of your exits with the acquirer.
00:36That was Qualcomm and Modular.
00:38I just wanted somebody who was high up the cap table on that company, your experience of that process.
00:44We were fortunate to be the first check-in to the company,
00:46and we led that first round and have been involved with Chris and Tim the entire part of the journey.
00:53The company, Modular, is the software layer that sits on top of technology,
00:57sits on top of AI chips to make sure that any model can run on any chip.
01:02So I'm kind of riffing on the intro there, right?
01:04That there is this appreciation more than ever of that layer.
01:07And NVIDIA has CUDA, and Chris's idea was, what if there was an alternative to CUDA that was more open
01:13and could work for any chip and any model?
01:15And Qualcomm was an early customer.
01:17Chris Giano was quite visionary.
01:19And I still remember where I was sitting when Chris Latner called me and said,
01:23hey, you know what?
01:23Chris Giano is going to fly up from Irvine, and he wants to have dinner with me.
01:27What do you think he wants to talk about?
01:28You know, they've been customers for a while, and they're excited about what they're seeing.
01:31And, of course, that dinner ended up being an overture to Chris Latner to come and be a part of
01:38Qualcomm.
01:39Usually, founders don't love the idea of M&A, particularly this year.
01:42Did you like the idea?
01:43I mean, you can be honest, but your advice was go for it.
01:47I always start with a skepticism of M&A.
01:50The thing that I think about when I think about, you know, what is best for a company is what's
01:53best for the founder.
01:54And here, Chris and Tim saw a huge vision of disrupting CUDA, and they wanted the fastest path to do
02:01that.
02:01Chris Giano painted a future where, together with Qualcomm's capital and focus and attention and portfolio of chips,
02:08where they could do that together over the next decade.
02:10That was what Chris was enamored by.
02:12If we zoomed out to get perspective, the environment for your industry is private markets.
02:18Venture money is very happy to support companies, private for longer, et cetera.
02:25For sure.
02:26There is some life in the IPO market.
02:30Where does the sort of acquisition by a bigger technology be set in the field right now?
02:35Yeah, so for us, for GV, the thing that we care most about is investing in founders as early as
02:40possible.
02:40So we try to invest in the very first round, like we did at Modular, like we've done at Flapping
02:44Airplanes or Samba Nova Systems, where we led the Series A.
02:47And our objective is to help those companies grow and realize the technology that they're building, the vision of that
02:53technology, and get it out into the market.
02:55And sometimes that happens through an IPO, which is a massive amount of funding and just another milestone on that
03:01startup's journey.
03:02Sometimes it's M&A.
03:03Sometimes, like in the case of Slack, it was IPO and then M&A, right?
03:06And, like, eventually that technology needs to exist in the world and be funded by public markets.
03:12And it's either funded through a public company or through an IPO.
03:15It's a very interesting list.
03:17So Samba Nova is an example of a company that hasn't done either yet.
03:21But where's the activity happening?
03:24You know, many of your industry peers and colleagues talk up San Francisco and the Bay Area and Silicon Valley
03:30as being the mainstay of intellectual and financial capital.
03:34So GV has $13 billion under management and offices in London, New York, Cambridge, Mass., and the Bay Area.
03:41We're trying to convince most of our London, New York, and Cambridge investors to spend more time in San Francisco.
03:46Wow.
03:46We think that all of the activity right now—
03:48You mean the investing partners of the firm that are based outside of the Bay to come spend more time
03:52in the Bay?
03:52We're convincing them to spend more time.
03:54So a partner like Crystal Huang in New York, she spends every other week in San Francisco because of the
03:59sheer volume of the activity that's happening here.
04:01She still invests in New York-based companies.
04:03We still think the best companies are built everywhere in the world.
04:07But right now, the clear concentration and the activity is happening in the Valley.
04:12The last thing I want to ask you about is proxies.
04:14So this is an interesting idea.
04:16In the software space, it was a bit easier because you had publicly traded proxies.
04:20You could sort of determine valuation and TAM and where they would sit in the field.
04:26In other areas, it's more difficult if all these companies are staying private for longer or they're being acquired, like
04:31many of your portfolio companies have.
04:33I mean, I think valuations are increasing exponentially, and they're doing that because of the TAM.
04:39Exponentially but justifiably so?
04:41I think in many cases, justifiably, I mean, when you have exits that look like they're in the hundreds of
04:46billions or trillions of dollars, like the set of IPOs that are coming soon, then you have a lot of
04:51venture frenzy into early stage companies.
04:53I think at GV, we like to pair deep subject matter experts with people who have conviction.
04:58There are some firms that just look at conviction.
05:00And so when you're just following conviction or you're just following heat, you're going to invest in things that everybody
05:05else thinks are interesting.
05:07We tend not to do that.
05:08We tend to be quite contrarian.
05:09I think you'll see that.
05:10We were investing in infrastructure before the chat GPT moment.
05:13We were investing in AI applications when everyone else sort of pivoted into infrastructure.
05:18Right now, we're really excited about science.
05:20I think that AI for science is going to be a fascinating place to be in the next 10 years.
05:25And this is using the best models with the best science in the world to find breakthroughs in things like
05:31material science, physics, math.
05:33We're seeing papers being written at an unprecedented rate that are showing human breakthroughs.
05:38And we think that rather than the chat GPT moment, the chat bot moment being the thing that connects with
05:43Main Street, it might be those scientific discoveries that connect with Main Street that increase the human condition.
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