1Mby1M AI Investor Forum: David Hornik, Lobby Capital (Part 5)

Sramana Mitra: I was also thinking about agentic AI in comparison to two massive trends that we have gone through – e-commerce and Software as a Service (SaaS).

Now, if you look at the e-commerce world, Shopify came along followed by comparable platforms. It made it really easy to build online shops. That created this golden age of bootstrapped e-commerce businesses. Everything got reinvented – every niche e-commerce, every specialty retail. Setting up a shop on Main Street became setting up a shop on the internet. That became one of the easiest bootstrapped business strategy on the planet.

Now, if you look at the SaaS world, again, we have seen tremendous reinvention from client services. Lots of workflows got changed. The big win was that the mid market and the small businesses started being able to access software. Cloud computing was a boon to them because they were able to access software. From the entrepreneur’s point of view, the small business market became a reachable market – delivery wise and unit economics wise.

That was major, but it did not have the same level of entrepreneurship that e-commerce saw. Right? So there were many more bootstrapped e-commerce entrepreneurs than bootstrapped SaaS entrepreneurs. There were more venture funded entrepreneurs on the SaaS side than on e-commerce, because e-commerce was not this necessarily scalable category except for a few big domains.

Now, which path is AI in general and agentic AI in particular going to take? Something tells me it’s going to go the e-commerce route. This is really conducive to doing bootstrapped entrepreneurship with at scale.

The pace at which the infrastructure is coming up is tremendous. The layers of abstraction are really getting built very fast. Platform as a service is happening at a completely different level. Again, Nvidia in the earnings call was all about AI factories and a full stack AI solution available at the tip of people’s fingers. The level of infrastructure development that is happening this time round is amazing.

The reason I stress bootstrapped entrepreneurship so much is not only for all the things that you said early on, but also because bootstrapped entrepreneurship is the feeder to scalable entrepreneurship.

You kind of have to build something bootstrapped before people put money into it. Very few people write checks on ideas. So you kind of have to validate whatever thesis you have, and then you can raise money.

So bootstrapped entrepreneurship is the cornerstone of high degrees of venture capital work as well. How do you see that panning out?

David Hornik: Well, I think you’re right. I had a very smart young student who ended up at Stanford B School who I knew when he was an undergrad. At the time, he trying to put himself through B School. It turned out that there were multiple e-commerce channels where he could buy something on an eBay, or he could buy it on Amazon, or he could buy it on shop.com or whatever, and then he could sell it on those same platforms.

He had created a set of bots that would constantly track the selling price and the buying price of these particular things. When there was a gap, he would list them on the respective target platform, sell it, and then buy it from the other one and drop ship it to the person who bought it, and keep the margin between the two platforms. He did nothing. His agent does everything – sell it, buy it, ship it. And the two platforms did all the work of taking the money, taking the goods, pushing the goods, et cetera, which was fantastic.

Of course, it was only a question of time until that disunity came together. By the way, it still exists, right?You can find better prices on one thing than another thing. So, agents are going to be able to do these things, right? They’re going to be able to do a bunch of these things. The existence of infrastructure companies that enable the component parts is what’s differentiated.

Now, it’s great to start a shop. You could sell a bunch of handmade stuff, which was Etsy, but most of that money is because someone else’s making a thing. You’re marketing it on your shop; you’re not even holding inventory. You’re just selling it. It creates real value in the manufacturing. It creates real value in the shipping, and it creates real value in the marketing, right?

There are a bunch of businesses that are solving these problems so that small business owners can pull together their solutions to make a little bit of money.

So, what are the solutions you can make, right? What are the infrastructure pieces that will allow others to leverage the technology advancements to build their own businesses? Those will be the better businesses, and they’re still bootstrappable for sure. But that distinction of I can build a bootstrapped business that makes me some money sitting on top of other people’s platforms is dramatically less interesting than I can build a platform that allows others to take advantage of the technology that I’ve built, and I get to scale and grow with their businesses.

This segment is part 5 in the series : 1Mby1M AI Investor Forum: David Hornik, Lobby Capital
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