StrictlyVC: Elad Gil and Sarah Guo on AI Investing in a Changing Market
Last week, we hosted our first StrictlyVC evening of the year in San Francisco, where prominent AI investors Elad Gil and Sarah Guo joined us to discuss their approaches to investing in artificial intelligence. The conversation was timely, given the current market conditions, where deals are getting bid up feverishly and some startup teams are looking to sell due to the costs involved with building their software.
The State of AI Investing
Before diving into the specifics of Gil’s and Guo’s approaches, it’s worth setting the context. Two months ago, the AI investing landscape was quite different from what we see today. Deals were getting bid up feverishly, and some startup teams were eager to sell due to the costs involved with building their software. However, with the current market conditions in mind, Gil and Guo shared their insights on how they think about AI investing.
Elad Gil: A $2 Billion Fund
Gil has reportedly raised more than $2 billion from investors in the last couple of years, which he is investing almost single-handedly. While he declined to confirm this amount, he mentioned that he always pulls in support from some kind of investor or partner. For example, after a former chief of staff founded his own company, Gil brought aboard two "highly technical" hired hands to help him understand the new tech bubbling up.
One of these individuals is Shreyan Jain, a former software engineer at Ramp who has two computer science degrees from MIT. Jain has built an embedding playground with another engineer in Gil’s orbit, allowing them to swap in and out any underlying vector [database] in any embedding framework, so they can play around with different tools.
Gil emphasized the importance of creating clear guidelines with one’s own investors to get ahead of perceived conflicts of interest. "If you have that clarity of how you’re going to act, it makes a huge difference," he said. "It gets rid of ambiguity, it gets rid of uncertainty, it gets rid of bad feelings."
Sarah Guo: A More Traditional Approach
Guo is taking a more traditional approach with her year-old firm, Conviction. She calls it a "baby little $100 million fund" compared to Gil’s billions of assets under management. Despite this, Guo has already brought aboard two other investors, a talent partner, and an operations person.
She also emphasized that she has enough skin in the game that she doesn’t take lightly any decisions in her relatively concentrated portfolio. "I’m a large investor in my own fund," she said. "Like, I actually need the companies to work over time."
Protecting Against AI Abuses
Both Gil and Guo discussed their approaches to protecting against AI abuses. They emphasized the importance of understanding the potential risks associated with investing in AI technology.
Gil mentioned that he is concerned about the French values (not really), while Guo discussed the need for greater transparency and accountability in AI development. "We need to be more transparent about how we’re building these models," she said.
The Biggest Questions in AI
Guo also highlighted some of the biggest questions related to foundation models like GPT-4. She emphasized that there is still much to be learned about these models and their potential impact on society.
"We need to have a more nuanced understanding of how these models work and what they’re capable of," she said. "We need to think carefully about the potential consequences of deploying these models at scale."
Conclusion
The conversation with Gil and Guo was enlightening, given the current market conditions in AI investing. Their approaches to investing in AI were both insightful and thought-provoking.
As we continue to navigate the changing landscape of AI, it’s essential that investors like Gil and Guo are having these conversations about the potential risks and benefits associated with investing in AI technology.
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