5 Questions Investors Should be Asking Inception-stage Generative AI Founders | TechCrunch+

We believe that we are at the dawn of the generative AI era, similar to the prior PC, web, mobile and cloud eras, which represents a sea change in how consumers and businesses will interact with technology. However, building successful companies will require a specialized focus from investors — not just in providing capital but also in operational prowess that’s as unique and forward-thinking as the generative AI industry itself.

Last week, we announced the first dedicated seed vehicle in our history, the $250 million Mayfield AI Start, which will support founders starting at day zero.

As we meet with many AI-native founders, here are the top five questions we’re asking to help guide their journey from inception to iconic.

1. How do you plan to dominate this new tech stack layer?

Paradigm shifts propel the rebuilding of the technology stack, creating new enduring companies in every era. For instance, Oracle rose to prominence as the PC era enterprise software provider, but in the cloud era, Salesforce and the SaaS model became a viable alternative. Intel dominated as the chip king in the PC era but mobile customers preferred ARM (Advanced RISC Machine), which is now being displaced by RISC-V today.

The AI era has already created leaders like Nvidia on the chip front and is giving rise to emerging leaders like open source AI model community Hugging Face (similar to GitHub in the cloud age) and foundational model platform OpenAI, whose ChatGPT is being compared to the Netscape browser moment of the web era.

So we are encouraging AI-first founders to think big about how they will become an independent company that dominates a layer of the new technology stack.

2. Are you providing a painkiller or a vitamin?

AI-powered innovation, in particular with large language models and generative AI, has the opportunity to create new markets and shift the dynamics in existing markets. But it is important to identify what innovation bet a founder is making and frame it as a painkiller, not a vitamin for the specific persona they are targeting.

Some questions we are encouraging founders to ask include:

  • Is my company driven by the fundamental belief in the responsible and human-centered use of AI?
  • Are we providing trust and safety around proprietary data, and will the compliance department resonate with this?
  • Are we leveraging generative AI into domain-specific workflows that improve the business productivity of sales, lawyers, engineers, marketing, support and others in the enterprise?
  • Do we have a strategy to reduce training and inference compute costs for our customers and our company?
  • Are we making it easier for developers and data scientists to build applications?

3. What is your unfair advantage?

We believe that innovation does not stop at the technology or product level, but extends across the value chain. We ask founders to think about other moats they can build, like:

  • Vertical foundational models.
  • Proprietary datasets.
  • Architectural innovation in semiconductors.
  • Business models with varied pricing options.
  • Diverse go-to-market strategies such as open source or PLG (product-led growth) with network or data effects.

4. Are you automating or adding value?

AI has been described as everything from an extinction event to the latest chapter in the investing hype cycle. For several years now, we have seen companies leverage a movement we refer to as the “Rise of the Individual,” in which software augments humans and elevates them versus merely thinking of them as their customers. Founders who begin with the intention of building AI that is a teammate to humans by providing a co-pilot for their users are already seeing huge adoption.

5. How much are you raising, and how will you spend it?

Investors appreciate founders having a clear idea of how they will use the capital they plan to raise. It should match their team makeup (e.g., if it’s a solo founder, she needs to make sure she sets aside enough of an ESOP pool to attract her founding hires); their business model (allocating enough cash if it is a compute-heavy model); and their early product plans (if it’s software only, will it require infrastructure for training, etc.).

We look forward to partnering with bold entrepreneurs to power a responsible AI-first future!


Originally published on TechCrunch.

2023 Mid-year Review

Sharing highlights from the past 6 months including $955 million raised across our two latest funds, founder journeys & insights, our Managing Partner’s 15th appearance on the Midas List and the Mayfield Way – it’s been a wild ride in Silicon Valley (to say the least), but we’re eternal optimists in the power of entrepreneurs to build a bright future.

Founding Voices: Make Your Case to Transform the Status Quo

Make your case to transform the status quo

Revolutionary ideas are a tough sell; people are naturally apprehensive when you tell them you’re going to do what’s never been done before. But even if experts doubt you and the industry “doesn’t get it,” you still shouldn’t settle for lukewarm support.

“Most people, when they heard our idea to create the world’s first solid-state chip for active device cooling, would say it’s impossible. The attitude of some seemed, ‘We won’t believe it even after we see it.’”


Co-founder & CEO, Frore Systems

When dealing with ideas that are ahead of their time, it can be difficult to parse truly game-changing innovations from techno-optimistic fantasies. All that is to say, don’t take skepticism personally.

The best investors, however, will approach moonshots with curiosity rather than doubt. You’ll still need to make a strong case for yourself, and think critically about how you’ll bring your idea to life. But if you can prove your ambitions are grand, yet rooted in reality, then you can attract partners who have the vision to back you.

“When you pitch a moonshot, you’re being held to a higher narrative standard,” says Navin Chaddha, who led Mayfield’s inception investment in Frore. “Iterative products can lean on talking points like efficiency gains and market sizes. But a moonshot needs to address all those tangible things, and paint a bigger picture of how your idea will shake up the status quo for the better. You need to balance optimism and realism, but if you do that successfully, then you position your product as a proxy for creating lasting change. That can be a really powerful incentive for investors.”

Managing Partner

AI, Enterprise, Semiconductors

The Golden Age of Semiconductor Innovation Continues

As a venture capital firm with a 50+ year history of investing, we have witnessed many technology inflection points. Iconic semiconductor companies, which gave Silicon Valley its name, grew by taking advantage of Moore’s Law, doubling processing speeds every 24 months by packing more transistors on chips. About five years ago we, along with others, observed a plateauing of Moore’s Law, giving rise to a need for architectural innovation & workload-optimized silicon. I shared how the Renaissance of Silicon would create new industry giants, and wrote about opportunities for startups.

In 2023 the golden age for semiconductor innovation continues, enabling the rise of startups to serve emerging market needs. This is driven by governmental policy and four industry shifts. 

CHIPS Act: The recently signed CHIPS Act, through which the government will provide incentives for companies to manufacture semiconductors within the US, is a major development. These incentives extend to the supply chain and companies operating in mature nodes. In addition, there are R&D provisions that intend to improve access to prototyping which can encourage startups that need to leverage fab process changes to innovate. There are also expectations for a $500M fund for chip startups.  

RISC-V: We have seen the increasing momentum of the RISC-V movement, an open source architecture which has the potential to create exponential opportunities, similar to how Linux impacted software. Startups who are freed from using the closed X86 system or paying the prohibitive licensing fees imposed by ARM, are inventing new processors for new applications. 

Chiplets: The emergence of chiplets –  tiny integrated circuits that contain a well-defined subset of functionality and which can be implemented in a mix-and-match “LEGO-like” assembly – is another trend powering innovation. 

EDA-as-a-Service: Cloudification has come to semis with the emergence of EDA-as-a-service, providing vendors access to design tools in a pay-per-use model. 

Shuttling: And the prevalence of *shuttling* – the ability to utilize partial capacity in fabs – similar to renting space in shipping containers, has greatly reduced the cost of getting to the tape out stage.

Eight market opportunities will benefit from the availability of specialized silicon:

  • IoT  – The 100 billion devices that are touching all aspects of our lives – smart thermostats, doorbells and more – need to have intelligent processors with cellular internet connectivity.  
  • Autonomous – This is a complicated problem, as self-driving and ADAS (advanced driver assistance systems), are augmenting humans for the first time. A car is bigger than a data center with hundreds of interconnects. There has to be breakthrough processing at the edge, through inference chips as an example, as a bandwidth heavy solution like sending data back into the cloud for AI processing will not work. 
  • Cooling – Climate change is coming to data centers which are already moving to liquid emergent cooling, but that is not enough. Phones have 10x the power of desktops 10 years ago—when they overheat, they have to throttle the CPU, leading to poor performance. Miniature devices struggle to fit fans. There will be a new wave of solid state cooling startups addressing this need. 
  • Biology – Breakthrough health devices such as next generation sequencers, needle-free glucose monitoring sensors, new diagnostics systems and the like are creating the need for new kinds of special purpose chips.  
  • Vision – Most devices now have eyes (phones, doorbells, cars) and as their resolution goes higher, we need their processing power to catch up.
  • Optics – Copper wires have limited capacity leading to the need for optical interconnects to handle 400-800 gigabits/second. What used to happen in telecom with undersea fiber will now happen in commercial offices and data centers for connectivity.
  • MEMS – There will be a lot of new innovation in sensors for various applications. 
  • Web3 – Similar to how Cisco, Sun Microsystems, Palo Alto Networks or Juniper Networks served as the gateway to the Internet in Web 1.0, we believe that new equipment giants for Web3 will be created. 

The semiconductor industry has a 70+ year history of innovating at inflection points to create new categories of products and maintain the US competitive advantage. I believe we are at another such inflection point, one in which governmental support and the driving force of new markets are coinciding to help entrepreneurs put silicon back into Silicon Valley.

2022 Year in Review

2022 continues to test our resilience on the economic, political, and social fronts. However, as a People-First firm with a 50 year plus history of investing through up and down cycles, we remain eternal believers in the power of entrepreneurs and their ability to build a bright future. Our team of founders turned investors is eager to partner with entrepreneurs who are changing the way we live, work and play, and we look forward to our shared inception to iconic journey. Join us as we look back on 2022 and forward to the journey ahead.

Saving the World: The Playbook for Building Planetary Health Unicorns | TechCrunch Disrupt 2022

Mayfield Partner, Arvind Gupta led a session at TechCrunch Disrupt 2022 where he shared insights into creating built to last human and planetary health startups. Here are some key takeaways: 

Define your keystone problem

When building companies that aim to tackle some of humanity’s biggest challenges, it’s easy to get distracted by the noise of endless problems that need to be solved. Focus on one keystone problem and ignore everything else. When working to solve your keystone problem treat your first product as if it were your last and ensure you can demonstrate a high surface area of impact. Arvind warns that the risk vs reward ratio becomes difficult for investors to justify if startups are not addressing a large enough market, so keep TAM in mind when visualizing your product and deciding which problem to solve. 

Company building is a team sport

In turbulent markets the highest quality teams come out on top. Founders should concentrate their efforts on attracting an all star team, including expert advisors, to help them navigate the long and winding road of company building. It’s important to acknowledge your own areas of weakness quickly and hire a team that complements your skill set.

Lean in

Human and planetary health founders often find it difficult to evolve from scientist to CEO, as succeeding as a founder requires a different skill set and mindset compared to academia. Founders have to understand both the science side and the business side in order to galvanize their team around the core mission and ultimately build iconic companies.

How Startups Can Survive The Downturn With Financial Planning | TechCrunch Disrupt 2022

Former 3x CFO turned Cube CEO & Co-founder Christina Ross joined Mayfield Partner Rajeev Batra at TechCrunch Disrupt 2022 for a candid conversation on what startups need to survive today, and how financial planning can help them emerge stronger on the other side. Here are some key takeaways. 

Engage potential customers to iterate your way to success:

It’s essential your product is a painkiller not a vitamin. For Christina, this meant figuring out who her ideal user was and building trust and rapport with them. Through consistent conversations with potential customers Christina was able to gather meaningful feedback on her product. Rajeev reflected on Cube’s journey by remembering that even when Christina had confirmation bias she continued to test her idea. This became a key part of setting herself up for a great Series A funding round despite the fact the pandemic was in full swing. Eventually Christina began to ask her potential customers if they would consider paying for Cube’s spreadsheet-native FP&A software. When she started receiving consistent yeses, she knew it was time to launch. As Rajeev says, a product that people won’t pay for is not a product, it’s just technology.

Manage your capital to your goals:

In recessionary environments there tends to be pressure to immediately cut costs because, as Christina has said, cash is king and runway is queen. However Rajeev warns that you cannot cut your way to success, you have to manage your way to building a great company. You should think of capital as something to be managed to a goal. When managing for growth, it’s useful to keep the rule of 40 in mind: your revenue growth rate plus profit margin should be equal to or more than 40%. During challenging financial times, Christina advises finance leaders and founders to take a look at their strategic priorities and focus on one or two only, then manage your capital to these milestones, as many startups die of indigestion, not starvation. 

Build a zone of trust with your investors:

At Mayfield we invest in long-term relationships with founders on their company-building journeys from inception to iconic. Spending time to build trusting relationships with your investors ensures that as a founder you have someone to lean on for advice, which is especially important when times get tough. The path of an entrepreneur can be a lonely one, so set yourself up for success by building strong relationships that can withstand the ups and downs of the company building journey.

How to Recession Proof Your Company | TechCrunch Disrupt 2022

Ursheet took to the stage at TechCrunch Disrupt 2022 to share lessons learned during multiple financial downturns as an investor and a founder, as a follow up to his Masterclass session with the Battlefield cohort. Here are some key takeaways. 

Running your company during a downturn requires razor focus

Even though in a recessionary environment cash is king and runway is queen, you can’t become over conservative during a recession, because you can’t cut your way to profitability. Build a zero-based budget and then find the areas for quality growth and double down on them. Concentrating your resources and attention to fewer things will increase your odds of coming out stronger on the other side. 

Build meaningful relationships with your investors

At Mayfield we invest in long-term relationships and support entrepreneurs through all the ups and downs of a startup. A common mistake founders tend to make when they are feeling the weight of an economic downturn is partnering with misaligned investors. Don’t take money from investors who are looking for a quick exit – it’s important to find someone you trust who will champion your vision for the company. At the same time, during economic downtowns it’s important as a founder to become situationally aware as fast as you can. Demonstrate to current and potential investors that you understand the environment by planning based on historical multiples. 

Look for the silver linings

Although challenging, recessions can provide a great opportunity to build successful and long lasting companies. Hiring during a downturn is significantly easier, and the people you hire will be there because they genuinely want to be at a startup, instead of hopping on the bandwagon. There is also less competition during a recession, both from other startups and big companies. We look forward to investing in entrepreneurs changing the way we live, work and play.

Evolving Your Selling Approach for Today’s Economy

Questions you should be asking your sales team:

  • So you got a meeting, but can you stay relevant?
  • 2023 will be the year of the CFO, are you prepared?
  • The pandemic caused huge changes, but are you still selling the same way?
  • Honestly, how well do you know your customer?

Mayfield hosted Gary Sorrentino, Global CIO at Zoom, to have a discussion with our portfolio companies on how CIO and other executive spending dynamics are changing in this turbulent market. Gary shared what works and what fails, and how to evolve for today’s market dynamics that require more high impact business value as the core vs. relying on underwhelming technology features, functions and “please no” demos!

Corporate tech leaders are revisiting budgets and vendor relationships in preparation for the possibility of tougher times ahead, and it will become increasingly important for startups to begin adapting to these headwinds. Gary dives into how exactly executives are editing their priorities, and how sales and marketing can best position to win over difficult deals in today’s more challenging market. Because after all, you can get the meeting, but do you really know how to add value? Can you stay in the room? This is a very simple concept, but tactically less simple than it initially appears? How can startups move beyond being interesting and having cool tech to being high-impact and high-value? How are they making this worthwhile for the buyer? Because at the end of the day, that person has to take the product down the hall and actually get budget (or bigger budget). The goal should always be to create a lasting, long-term, relationship.

Key Takeaways

  1. Business Value Comes First – Remember that CIOs are nice people – they’re not necessarily telling you “no” when they won’t buy your product – they’re telling you that you’re not high enough on the business value chain that they can pay that for it. Business value is fundamentally the key – not cost savings
  2. You’re not Selling SKUs, You’re Selling Solutions – You’re selling happiness, customer experience, client experience, user experience. If you think you’re selling software, you shouldn’t be selling it
  3. Buyers are Accountable to Those Above Them – Your deck and your presentation must provide them with the right tools to sell this product to the rest of the organization, and make them look like the smartest person in the room

A Few Words on Starbucks and Doing Business Right

Modern Selling – What Should the Post-COVID Sales Pitch for Enterprise Look Like?

It’s important to keep in mind that buyers are accountable – so a good sales presentation needs to speak to that. A startup’s deck should make the potential buyer look good to their superiors, by covering things in a way that can be easily passed along upstream. A few core tips for these decks that Gary covered include:

  • Kick things off with a solid executive summary. If you get stuck on that one slide for the full hour or 45 minutes just talking about the product or business value of your solution, that’s a successful meeting. Consider: Here’s what makes us different, here’s what your C-suite wants and you want, and are we missing anything that’s on your internal list?
  • Consider how the customer will present this internally. That has to be 90% your work and 10% theirs. Make sure that whatever you’re giving them is easily digestible for their internal team. As the selling team you can even ask them: “How can I properly arm you? How can I package our content in a way that makes sense for you to share?” Make the buyer the smartest person in the room when they go to talk to the board
  • Educate yourself about the person on the other side of the table. Two pages is a good rule of thumb. The more you know about them, the more successful the conversation is going to be. Are they a buyer or a seller? Do they believe in self-development? Do they believe in the cloud or are they really one of those on-prem guys? Do they believe in flexible work? Everyone is all over LinkedIn. It’s almost like dating today – you Google someone before you meet them – why aren’t you doing that to the person you’re presenting to?
  • Don’t try to convince the buyer that they have the “problem” you’re trying to sell. In that case you’re basically telling them that they don’t know what they’re talking about. If the buyer doesn’t know the problem, there are larger issues afoot. That being said, providing a quick overview, and proving that you understand the buyer’s space is extremely valuable. Don’t just kick things off with a bunch of questions (“You just said you serviced a bunch of banks! Don’t you already know the answers to these questions?”). State the problem back in terms the buyer will understand. Plus, have different game plans: Have a game plan for J.P. Morgan, but also have a game plan for the regional bank. They are not the same
  • Be careful when using competitor logos. Everyone knows each other and it can come across as arrogant – perhaps save some of that data for the appendix
  • Business value is extremely important. What is the value? How will you make the buyer successful in their firm by using the value to fix a problem?
  • What are the next steps? Do not forget to have a clear path forward
  • Don’t spend too much time talking about cost or discounts. If the buyer doesn’t like the product, who cares about the cost or discounts? This can be covered briefly towards the end. Additionally, ROI can be very hard to sell as well. If you come in and say you’re saving a company a million dollars, there’s probably no way you’re saving that company a million dollars (or at least not green dollars). It gets discounted 1000%. Consolidation/eliminating tools can be an easier sell here (because headcount reduction won’t actually happen but consolidation of tools might actually happen). So many ROI numbers are just completely made up
  • Don’t sell SKUs, sell solutions. The true value that you’re providing is not the product, it’s in between the products. It’s when the client asks: Do you know how I could take this beyond the scope? Don’t fail to tell them how to fully leverage it
    Video speaks a lot of words today. Perfect and record the elevator speech. Attach it to emails

On Customer Councils and Advisory Boards

Do these bring real value? Starting industry-specific councils to listen for feedback can provide tremendous customer insights (vs. using them to push SKUs). Bring in your biggest customers and have them help you understand what their problems are in a given area. How can your products be better designed to help them?

First, you learn how you have to mature the product. That’s always good. But you also learn what they’re thinking, so that when you go to sell their peers, you can take their words and regurgitate them back. Instead of “J.P. Morgan said X so you should do X,” you want to be saying “We work with your industry and we have heard from your industry that you have a need to do this better.” Do you want to be a vendor or a partner? Everyone is a vendor already, you have to earn partner. Lead with thought leadership.

But don’t forget that incentivizing customer councils or advisors is important as well – it has to be a two-way street. People don’t need a bottle of wine shipped to their home, what they want is to not waste that hour and a half. People want to communicate with their peers and feel like a) they’re experiencing insider secrets, and b) they’re helping guide this product that they championed (and are learning something in the process). It shouldn’t be your council, it should be theirs. Ask them: Do you want to hear about new products or what we’re doing in the future? Do you want to add value to some of the things we’ve been thinking about? Do you want to present successes and failures? Let them help set the agenda.

Marketing Spend – How Can it Be Best Utilized to Get in Front of Major Buyers?

Executives don’t walk through an airport and read the signs for the technologies, but if they don’t recognize the names on those signs, shame on them. The secret is to be where those executives are. CIOs go to Gartner, go to Avanta, go to Orbies. Sponsor some of those where the CIOs are at. Get in contact with them, be there. Be at the bar and put your card down, not at a booth. Go where they are.

Prospecting emails are okay, but you need to grab someone in the first couple of lines. Don’t mention funding, don’t mention your advisory board: What is the product and value prop? Don’t waste words in your email. The first paragraph should be about you, the second should be about the buyer, or the third paragraph won’t get read. And be personable. For example: “Hey Gary, I saw on LinkedIn last night that you were a nominee for OnCon – I actually went on and voted for you. Listen, I really think we have something that will bring value to your company. I don’t need a lot of your time, could we just figure out how to meet for 15 minutes?” That’s all it really takes.

Simplification vs. Best of Breed

Keep in mind when selling that sometimes B+ can be good enough. Most best of breed solutions are never fully leveraged, and can often require more human capital to be successful. Simple and easy solutions that spin up quickly often have a lot of appeal even if they are missing some of the bells and whistles. That being said, there are some areas where a best of breed stack is truly better, for example, the CI/CD space.

2023 Budgeting

The pandemic was the year of the CIO, the post-pandemic is the year of the CFO. What’s important is that if the CIO can keep eight out of ten solutions – you’re in the top eight. Is your value proposition a “need to buy,” rather than the “want to have?” Are you higher up the value chain? Companies aren’t about saving money per se, they’re about spending money in the right places. The pandemic was a black swan event, and the spending taking place just wasn’t realistic – there will be a return to a bit more normalcy.

Post-COVID Selling

Are we the same employees they sent home two years ago? No. It’s not about working as many hours as you can, it’s about bringing value back into your life and bringing value back to other people. So, it’s safe to assume that your clients have changed, which also means that the way you sell has to change.

We talk a lot about “experience” today – employee or customer. Think about how that model has changed. Empower your team to make your customers happy.

About Gary

Gary Sorrentino serves as Zoom’s Global CIO, after spending over two years as our Global Deputy CIO. A former Managing Director for J.P. Morgan Asset & Wealth Management, Gary was the Global Head of Client Cyber Awareness and Education.

For over 12 years, Gary was the Chief Technology Officer for J.P. Morgan AWM’s global technology infrastructure initiatives, where he managed its Data Privacy program and was responsible for Infrastructure, Application and End User Technology Production Support. In 2014, he assumed a new role as the lead for their Cybersecurity efforts and developed a firm-wide “Protect the Client” Cyber program designed to raise cybersecurity awareness among employees and clients.

With almost 40 years of experience in Information Technology, Gary has served in various other IT leadership positions in firms across the financial services industry. Prior to joining J.P. Morgan in 2005, Gary was Head of Global Infrastructure and Head of Technology Efficiencies at Citi Private Bank, where he was responsible for Global Infrastructure Support and strategic technology initiatives. Other roles he has held include Global Technology CFO at Credit Suisse and North America IT Controller at UBS

The Modern Identity Stack: Startup Opportunities in the $80B Identity Market