41% of funded startups are solving the wrong problems

3 trends in startups/tech/venture

🤔 41% of funded startups are solving the wrong problems

• Per the latest research from Stanford, there is a disconnect between the problems workers want to be solved and the problems that startups are solving. Specifically, 41% of Y Combinator startups are solving problems that workers consider low priority, have low desire for automation, and see low tech capability/performance when automated (given the current state of AI).

• My takeaway? Workers want partnership—not replacement. Startups that focus on partnership in their messaging will see faster adoption.

🤖 AI is driving a bigger gap between good and great startups

• AI startups are generating revenue and raising rounds faster than ever before. I recently spoke about this trend at the largest AI summit in SF (more here).

• Today’s bottom-quartile enterprise startups have the same traction as the top-quartile enterprise of just a few months ago. If it takes you 6 months to generate $0.5M of revenue, 12 months to generate $1.2M of revenue, and 13 months to raise series A, you’re considered bottom-quartile by today’s standards.

• In contrast, if it takes you 6 months to reach $2M of revenue, 12 months to reach $5.3M of revenue, and 7 months to raise series A, you’re considered top-quartile by today’s standards.

💰 Venture capital gets the most “bang” for the least “buck” of any industry—and the “bang” continues to grow

• In the past, venture investments makes up only 0.1-0.2% of US GDP, but generates an astonishing 21% of U.S. GDP (in the form of VC-backed business revenue). Venture is a high leverage industry that creates value and drives innovation like no other.

• As more startups use AI to do more with less, the ratio between value generated and investment outlay will only continue to grow.

2 theses on what’s next

💻 Startups will help invent new work processes

• AI agents outnumber, outthink and outact their human co-workers. Startups now building AI agents can invent entirely new work processes that were previously inconceivable due to staffing limitations, time constraints, or the fine grained complexity of actual business operations.

• I explore specific opportunities for new work processes across consumer marketing, profitability maximization, enterprise procurement, and customer experience with Mark Settle, a 7x CIO across companies like Okta and Visa (full article here). A special thank you to Eric for connecting Mark and me (and even before that, Keith, for connecting Eric and me).

👩🏻 Messenger > message in venture

• Now that AI is making it easier to create content in every format (whether text, image, or video), we’re seeing more AI-generated content than ever before in even professional spaces like LinkedIn and email.

• Given how hard it is to separate what’s created by a human and what’s generated by AI, people will care more about the messenger than the message. The best venture investors won’t just be good at creating content—they’ll be great storytellers who can articulate why they care, where they can help, and what makes them unique.

1 tool I love

🎓 AI-generated beyond-camera entertainment

• AI is particularly good at generating beyond-camera content (not filmed in the real world, e.g. sci-fi, fantasy, anime), which Emochi is focused on.

• Built by former students of mine from Berkeley, Emochi has reached 713k DAU and $8.3M ARR within their first 8 months, outpacing top quartile startups.