How I Invest with David Weisburd
00:22:49 · Joseph Coyne, David Weisburd
[00:22:49] S1: Yeah. I think you have to meet your customer where they're comfortable, especially when you're a startup. So will SaaS modeling be the traditional or most frequent use case in the future? Possibly, possibly not. But right now, that's where large enterprises have been trained to purchase and been... You when they think about unit economics, going back to the Inspiren example, you know, how much is our customer paying us per month? How much does this cost us per month? What's our cost savings? What's our cost savings per user? Unit economics leads you to think about it in terms of a cost per unit. Oftentimes, that rolls up to a SaaS pricing model. Now in more avant garde tech, you might see usage based models, which we're already seeing a lot of. You may see even outcomes based models, right, where if we can produce this for you, large enterprise, you'll give us this. Right? Those are a little bit harder sells. I mean, I think that they're very aligned with outcomes driven and ROI driven implementations. So don't get me wrong. I kinda love that. But the buying behavior is new. And so there's some education and some comfort level, particularly with large enterprises, some of whom have been around for a hundred years. Right? And certainly over the last twenty years, they've been habituated to to price based on SaaS per seat or per month. So getting them out of that will take some time. Don't I think it's impossible, but I I think it'll... We'll see a slow ramp away from it. [00:24:10] S0: What comes next?
00:24:10 · David Weisburd, Joseph Coyne
[00:24:10] S0: What comes next? [00:24:12] S1: I think the usage based, consumption based, token based models are all things that are in the conversation right now. What we've seen is some hybrid approaches, so some SaaS plus utilization. We've seen some pure play utilization or token based models. Those can be scary for the CEO, CFO of a large enterprise because you have some opacity around, what am I gonna pay? You know, I know what my budget is. We've all bought into the budget. We told our board, our budget's x. What if we exceed that? Right? That can create problems. And so understand that and creating visibility is important for enterprises to really get comfortable with that buying behavior. I think you can cap it. You can tier it. That creates more hybrid approaches that look sorta like SaaS plus utilization. That may be the on ramp process that gets them comfortable over time to say, look, we've been doing this for two years now. Our utilization is x. We've paid a million dollars a year for the last three years. This year, we'll probably use it 20% more. So we've budgeted 1,200,000. That'll take some time. Right? They need to have the data behind that and the comfort level to make that type of decision. But, yeah, it's how most markets develop over time, and I don't think it'll be different here.
00:25:21 · David Weisburd, Joseph Coyne
[00:25:21] S0: Sitting where you're sitting, couple weeks ago, had David Breach, the Vista Equity president. They've deployed over a $100,000,000,000 in software. So they certainly thought long and hard on on this issue, and he believes that the future of software is not just selling software, but selling solutions. It's kind of do it yourself versus done for you model. Do you see that as the evolution in software itself? [00:25:42] S1: In the early days, we're seeing a lot of that. Consultative selling. I think we've seen portfolio companies with very powerful technology enter Fortune 500 companies, take the covers back, or open the hood and be surprised by how disparate and unruly the data is. And that very quickly turns into a data consulting project. For a VC, that's not what I love to hear. Right? We wanna hear [00:26:07] S0: like doesn't sound scalable.
00:26:07 · David Weisburd, Joseph Coyne
[00:26:07] S0: like doesn't sound scalable. [00:26:08] S1: This this will work out of the box. Right? And so I think you have to have your customers have to continue to deploy best practices in in data management, fidelity infrastructure in order to unlock, right, the plug and play value that a lot of portfolio companies and software companies will will ultimately bring. But the on ramp in the early days can be consultative. That that can be a positive to the startup in our world because they learn a tremendous amount about the problems that the enterprise is feeling. Once they've felt that and solved that, they can then replicate it and even create agentic workflows to replicate it across other use cases so that the next Fortune 500 they go into takes 10... Is 10 times faster for the implementation. But these are baby steps, I think, in the process of really unlocking the true enterprise value that will will come in in years.
00:26:57 · David Weisburd, Joseph Coyne
[00:26:57] S0: Reminds me of the Paul Graham advice, which is do the unscalable. If you wanna build a bill... Great business, do the unscalable, figure out where the problem is, and then automate. Same with the Elon algorithm. A lot of people think the Elon algorithm starts with automation, actually ends with automation. It's the number one problem you could have in engineering is that you automate something that doesn't actually add value. So have to figure out Yeah. Make sure that it adds value, run it, kinda make sure that that ROI is done. And then and only after then, then you automate. People have this, especially venture capitalists have this bias. Oh, I want something scalable. I want something automatable from day one, but sometimes it could be counterproductive even to the to the design of the product itself. [00:27:33] S1: Yeah. Potentially. And and I think, like, when you think about funding startups, you know, we always enter at seed. I think you need to create some realistic benchmarking and understanding that that will happen. And that leads to things like, you know, how much cash flow do you need to achieve a particular thing... A particular outcome. So what does it take to reach a series a, series b? I think on one hand, from a product standpoint, you can reach product maturity faster than ever. So, like, the dollars that we're putting into companies are being used with an efficiency that has been never seen before. [00:28:06] S0: Double click on that. Why why are companies able to scale so much quicker with so much less capital?
00:28:06 · David Weisburd, Joseph Coyne
[00:28:06] S0: Double click on that. Why why are companies able to scale so much quicker with so much less capital? [00:28:11] S1: I mean, I think it starts when you're thinking about product and code. I think agentic coding has been massively impactful, especially to people who know how to wield it. So early stage founders that are technical, that have engineering backgrounds themselves, are the people that we've seen in sort of the data research we've done that are benefiting the most. The most efficiency right now is being accrued to the engineers. You know, I think next on the list is something like customer service, which is just a great dataset, great use case that you can augment quickly. It's digestible. But when you think about, like, the biggest delta in efficiency, it's at engineer. And so, talking to large enterprises, you know, we have a number of advisors, technical advisors on our team that work at places like Meta, Amazon, Oscar Health. And when we talk to them, we say, what does your job look like now as an engineering or AI manager? And they say, I can accomplish four times as much in half the time. So when [00:29:03] S0: we do...... Improvement.