1Mby1M Virtual Accelerator AI Investor Forum: With Ashmeet Sidana, Chief Engineer at Engineering Capital (Part 4)

Sramana Mitra: Power story is a very complex story. As you were talking about your training, I was thinking about my engineering training and one of my favorite courses at MIT was Anant Agarwal’s VLSI design course. That is actually very automatable, right? Now you train AI to do chip design, and AI can design great chips. This is a highly automatable problem.

Ashmeet Sidana: It’s ironic that one of the first applications for AI has been software development. Software is being developed using AI, which is wonderful.

Sramana Mitra: That’s gonna go a long way. There is a very large population of people in the world today who make their living as software developers. If that becomes an AI job, then the evolution of that profession is going to be very interesting. My thesis is that that profession is going to become entrepreneurs. Because if you have understanding of how AI works and you can use tools to actually do that work, at least that’s a great background with which to come up with new problems that you solve using all those tools and technologies. That probably will explode entrepreneurship even further.

Ashmeet Sidana: Yes, I have a company which is working in that space called Kognitos, where the founder has written a compiler that cannot hallucinate and works with LLMs. It is a guaranteed 100% hallucination-proof way of automating tasks using LLMs. That’s the wonder of creativity of the human brain and entrepreneurship. People come up with new ideas all the time.

Sramana Mitra: So my last question is, what do you think you would be investing in five years time? We are seeing this market develop. We’ve kind of been in this business for a while. It’s not difficult for me to pick up the PaaS trend because I’ve seen this movie before. I know how PaaS works. I know how a developer ecosystem works. It’s kind of obvious to me that this is the direction this business is going to go. Then the VCs will invest in those applications developed on platforms, etc.

So, the industry has been around. We can extrapolate some of it. What are you extrapolating? What are your assumptions? What are your predictions, which are, I’m sure, informing how you are thinking about your strategy.

Ashmeet Sidana: Before coming into venture capital, I used to run product management at VMware. My background is obviously as an operating executive, having run a company before, and we had a saying in product management, “The problems stay the same, the solutions change.”

So five years from now, I believe we will still be working on the same problems, the same opportunities. How do we make people more efficient? How do we process information? What tasks are interesting to people?

A lot of the consumer work gets done in feeding the seven sins for people – ego, greed, etc., but the technologies and the solutions change for doing the same.

So the real question that you’re asking in my mind reduces to what will be the technology five years from now that we would be looking at from an investment perspective? I absolutely believe that AI is one of those transformational technologies which would be very relevant, important, and would have developed even more five years from now and will be at its peak in terms of commercial viability and application. So just like the internet exploded on the public scene in 1994 with the IPO for Netscape, but the internet had been around for decades before that, right? The internet existed, the networks existed, but people started using the internet with the web browser. Similarly, chat GPT brought AI to the forefront. And for the next five years, it is going to be an AI first world where we will be still investing in.

Sramana Mitra: Actually, I’ve said it was gonna be the last question, but as I was listening to you, something else came to my mind.

We have seen incredible amount of investment in Software as a Service (SaaS) for the last fifteen years. Around 2008, SaaS became mainstream. Of course, Salesforce started in 1999 but the cloud business became mainstream in the mid 2000s after the nuclear winter, right? That’s a long time already, almost twenty years.

So, but now, all these SaaS companies, including the ones that are $5M to $40M in revenue have to put AI in the heart of their applications, otherwise there are other companies out there that are coming into the market with AI. They’re leading with the current cutting edge technology and the ones that don’t have AI in their middle or in their heart are facing obsolescence problems. How do you think this is going play out?

Ashmeet Sidana: This is the inevitable march. This is creative destruction at its finest. This is what happens when a new technology or capability comes along. Let’s separate SaaS into two pieces. The reason SaaS became so popular is that it was a more efficient delivery mechanism and its business model of monthly or annual recurring fees was very attractive.

Sramana Mitra: Revenue predictability became very attractive for investors.

Ashmeet Sidana: Exactly. Those are the two sides of SaaS. There’s nothing which says that AI cannot or should not be delivered through SaaS.

Sramana Mitra: Stay with the same model that works. It’s a good one.

Ashmeet Sidana: In special cases like the mobile phone, where clearly on-device capabilities are very important, Apple has proved that you had to have had a control of the device to be able to deliver some features at an excellent level. In most of the cases you can deliver through other devices and SaaS delivery is very viable. So there will be a vast amount of businesses that will simply look and behave like SaaS but will be based on AI.

Sramana Mitra: That’s going to be AI SaaS basically.

Ashmeet Sidana: Exactly. It’s really going to be AI behind the scenes.

Sramana Mitra: If you’re a new company and you’re coming into the market as an AI SaaS company, that’s wonderful, but the ones who are further along and who are getting disrupted a bit, that’s where I think they’re facing problems.

Ashmeet Sidana: Yes, if you are an existing business with $10-$40M and if you bet it on an old stack, you’re going to get out of date very quickly, unless you can find a way of bringing AI into your offering and building your company with that mechanism.

Sramana Mitra: I think this is not an easy thing to do at all.

Ashmeet Sidana: This is extremely hard to do. This is also why as we discussed earlier, Sramana, that venture-backed companies succeed when they move fast, and you really only have a few years of window to build your business. If you think you have 10 or 20 years to do it, you don’t. The technologies will be different, the markets will be different, your use cases will have changed. So you have to run really, really fast. And speed is actually one of the best correlations with success.

Sramana Mitra: In venture funding, absolutely. There’s no question.

Ashmeet Sidana: Speed is one of the best correlations over there. So run fast, even at the cost of making mistakes. People who make mistakes but run faster end up winning compared to people who don’t make mistakes but run slower.

Sramana Mitra: All right. Is there anything I should have asked you that I did not?

Ashmeet Sidana: No, I really enjoyed the conversation. Obviously, AI is very topical today. It is an area that I am actively investing in, have been investing for the last five, seven years. So if anybody wants to start a company with a technical insight, please reach out, and I’d be happy to write you your first check.

Sramana Mitra: Well, there will be lots of distribution of your interviews. So I’m sure you will get lots of those. All right. Well, thank you so much, Ashmeet. It was great catching up with you a bit and look forward to talking more in due course.

This segment is part 4 in the series : 1Mby1M Virtual Accelerator AI Investor Forum: With Ashmeet Sidana, Chief Engineer at Engineering Capital
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