1Mby1M AI Investor Forum: David Hornik, Lobby Capital (Part 2)

Sramana Mitra: There’s one question that I want to ask you. I agree with everything you said. AI is making everything easier and cheaper to build, except perhaps marketing, because the market is going to become noisier.

David Hornik: For sure. You’re going to have to think of new categories. If you thought that content creation was your channel to marketing, right as the AI content generation explosion occurred, LinkedIn said they were going to generate a million pieces of content. So, what are we supposed to do with the fact that LinkedIn’s generating a million this year and everybody else is generating a million. There’s a lot of noise.

Then we have a lot of AI that’s optimizing for other channels, but in order to optimize, you’re all optimizing around the same thing.

If you can’t appreciate this phenomena, all you have to do is get on a very crowded highway where everybody is using Google Maps because it starts pulling people off the highway into neighborhoods. The problem is if it pulls everybody into the neighborhood; now the neighborhood’s terribly crowded, and you’ve just spread the traffic jam.

So when everybody is optimizing, ultimately, there is no optimal route, right? If a single person is optimizing, they have a whole bunch of opportunities. So, I totally agree with that.

The bigger question for me as an investor is sustainability. I do think that in the near term, there are a bunch of opportunities to address things for the first time that allow you to use other people’s infrastructure, pick the LLM of your choice, and create value.

The question is, can you create long-term value? Is it different? Is it long-term differentiated? Is there a moat? Will your business increase value that is defensible over time?

My suspicion is, that will not be the case. My suspicion is that the low hanging fruit today is low hanging fruit; therefore, lots of people are spotting it. There’s a lot of opportunity, it’s going to be competitive and it will be hard to differentiate in the long term, and it will be hard to be defensible in the long run.

So that’s the thing. It may be fine that people say, this is land grab and let me make money selling jeans to the gold miners while I can. Eventually, the gold mine is empty and there are no more jeans to sell. Then you must figure out, are you Levi’s selling jeans to everyone, or are you the folks who are selling pans for gold and the pans have no additional use once you’re done with gold panning.

Sramana Mitra: Yes. Our industry has always won with domain knowledge. If you have defensible domain knowledge with which you create a moat, that is going to continue to be sustainable competitive advantage, I think. That has not changed with AI. That remains a fact.

David Hornik: I’m not sure about that. Here’s why I’m not sure about that. AI will allow you to train the engine on domain knowledge, right? So, it is conceivable. It is true that being ahead of the curve has allowed some of the early AI-meets-law tech to use domain knowledge of what the law firms need to create a tool that will make it easier to write a brief or write a contract. But in the long run, I think the capacity to take all the domain knowledge and train an AI will allow the AI to encompass that domain knowledge in a way that may not allow for defensibility in the long run for the folks who got there first because they understood the space.

This segment is part 2 in the series : 1Mby1M AI Investor Forum: David Hornik, Lobby Capital
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