The Trillion-Dollar AI Hardware Opportunity (Navin Chaddha, Managing Partner at Mayfield)

Speaker A: So when Mayfield talks about being people first, how does that functionally play out? Speaker B: The entrepreneur kind and age and where they come from doesn't matter. What matters is alignment on values and culture. And that can only happen not in one meeting. It happens by spending time together. Speaker A: I know that you've spent a lot of time thinking about the vibe coding movement. Why do you think this is a movement with real staying power that can produce truly massive companies from it? Speaker B: We're going to be vibing with everything.

It's going to be like electricity. Energy, water. Everybody will use these vibe tools and create companies that you and I can't even imagine what they will be today. Speaker A: I'm curious how you think as this accelerates, will we find places where we productively introduce friction for the user because it's important for them to somehow think about it? Speaker B: So the skills you need will have to be augmented and up-leveled to do new things versus the things we were used to doing. We have to just let go because if you don't let go of those, we're going to become dinosaurs.

Speaker A: Hey, I'm Mario and this is The Generalist Podcast. As the saying goes, the future is already here, it's just not evenly distributed. Speaker C: Each week I have conversations with the founders, investors, and visionaries living in the future to help you see what's coming next and understand it better. Speaker A: Today I'm speaking with Naveen Chaddha. The managing partner of Mayfield. Speaker C: Naveen has one of the most unique vantage points in Silicon Valley. Speaker C: Each week I have conversations with the founders, investors, and visionaries living in the future to help you see what's coming next and understand it better.

Speaker A: Today I'm speaking with Naveen Chaddha. The managing partner of Mayfield. Speaker C: Naveen has one of the most unique vantage points in Silicon Valley. Speaker A: He previously founded 3 companies of his own, taking one of them public during the dot-com era, and has spent the last 20 years as a venture investor at one of the industry's most storied firms. Speaker C: His track record has secured him a place on Forbes Midas List a remarkable 17 times. Speaker A: Naveen is more excited than ever about the opportunities in tech today, and those in AI in particular.

In our conversation, we discussed Mayfield's people-first approach to investing, how Vibe Coding is transforming consumers into builders, and the stealthy billion-dollar startups popping up in AI hardware. I walked away from this conversation with practical insights about where the real money is flowing in AI infrastructure and the unglamorous niches experiencing hypergrowth. If you enjoyed today's episode, I hope you'll consider subscribing and joining us for some of the incredible ones we have coming up. Now, here's my conversation with Naveen. Speaker C: I'm really excited to have today's episode brought to you by GoFundMe Giving Funds.

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And in researching, I saw that you were in fact a cricket fanatic. And after going to my first match a few months ago, I thought I would start with a thematic question, which is what are the investing lessons or parallels that you take from cricket? Speaker B: Absolutely. So first, thank you for having me on your podcast. It's a real privilege to be talking to you. So for me, growing up, right, like in India, Cricket is sort of the national game. You grow up with it, and it has taught me a lot about essentially how to look at venture and company building.

So first and foremost, uh, to me, company building, like cricket, is a team sport. It's not an individual sport, and that changes everything where you put your team first and yourself second. The prize is for winning the championship is for the team, not for any individual. And that's the most important lesson I've learned, that company building is a team sport. Like any team, you need to have a set of mission and values, and you need to be people first to get the best out of them. So those are like some of the quick lessons I've had over the years.

And then as a captain of the team, which I used to be, you're also the coach. It's very unique during the game and there's no essentially quick breaks and timeouts. So you need to lead by example and be cool all the time and not show your emotions. So it takes a lot of emotional intelligence similar to what entrepreneurs need to do. In order to lead teams. Speaker A: That's funny. I went to a match at the Oval with a friend who's, you know, a true fanatic. And one of the sort of parallels that he was explaining to me, or one of the differences between cricket and soccer, because I'm a big soccer fan, he mentioned was this exact idea, the idea that the captain is really a much bigger figure in cricket, really more of a coach, a tactician, in a way that, you know, really doesn't exist in maybe any other sport.

Maybe you can sort of make a parallel to a QB in, in the NFL or something, but a very special role. Speaker B: Very, very important role. But even the QB in American football basically is continuously being guided because the breaks are every 30 seconds and the next play is essentially being put together by the team coach. So this sport is very, very unique and it's similar, I would say, and different. Like in tennis, the same thing happens too, right? But that's an individual game, and you just keep playing. You're your coach, you're the player.

But here, the difference between tennis and this is you're leading a team of 11 people, and all of you have to perform as one unit to win the championship. Speaker A: Well, I think we could probably talk about this for a while longer, but in the interest of talking more about your expertise and your incredible career, I'd love to move on to the world of technology and really capture a little bit of your history because you've had such an interesting journey in Silicon Valley. I think a really unique one covering operating, founding, and investing.

What was it that brought you to Silicon Valley to begin with? And when did you know, you know, growing up in India, like, hey, this is where I want to build my career and this is what I want to be a part of? Speaker A: Well, I think we could probably talk about this for a while longer, but in the interest of talking more about your expertise and your incredible career, I'd love to move on to the world of technology and really capture a little bit of your history because you've had such an interesting journey in Silicon Valley.

I think a really unique one covering operating, founding, and investing. What was it that brought you to Silicon Valley to begin with? And when did you know, you know, growing up in India, like, hey, this is where I want to build my career and this is what I want to be a part of? Speaker B: Absolutely. So I think having gone to the Indian Institute of Technology in Delhi from 1988 to 1992. In those days, there weren't technology opportunities in India and everybody had to go outside India and US was the place to go.

And I was lucky to do very well in the CADs. So had the choices to go to any university on a scholarship. And frankly, I always, growing up in an entrepreneurial home, always had the dream that one day I'm going to do a company and I wanted to do practical work and be in good weather. So that's what brought me to the Bay Area and brought me to Stanford. And then there were like role models along the way. I had heard a lot about Vinod Khosla, who was also an ex- um, alum of IIT Delhi who came to the Bay Area, created Sun Microsystems, and then had later become a VC.

So there were examples of people you can look upon. So I always had the thing, in order to change the world, there are two ways you can do it. One is research, and the second is going and building a company to change the way we work, live, and play. So that's what always excited me. I had a dream, and Stanford helped me fulfill it. And I got lucky because the internet was just happening when I was doing my grad studies at Stanford and working on my PhD, which I'm sure we'll get to talk about.

But I always dreamt about doing a company, being an entrepreneur, and what better place to come to the Bay Area. Speaker A: That's right. You mentioned you came from a really entrepreneurial family. What was that sort of heritage? What was the work that they were engaged in? Speaker B: Basically, the family was a combination of my working parents. Both my father and mother were working and my mother was a professor. So studies were like really, really important and like getting Bs were just not allowed. And it was only one thing you were taught in order to do well in life, you have to just be the best at the CATs.

So it started with that training, and my mom was very God-fearing, so instilled in me a culture of believing in religion, having beliefs, and things like that. Versus my father was a business executive, running sales, marketing, managing big teams. And there was only one difference. He was never the entrepreneur or what is called the owners of the company. He was a sales marketing executive and while growing up, then the chief executive. So I saw the difference. He was giving it all, but was never the founders and the promoter or the owner of the company.

That's where I realized that if I have to do something, it has to be a combination of cutting-edge academics and research, but applied into real-life problems, the best way to do it is be the entrepreneur, be the founder. Speaker A: You mentioned that there were folks like Vinod Khosla before you sort of making this path. Did you seek out people like Vinod when you came to the Valley? Did you sort of try and meet these forebearers and take sort of advice from them or connect with them? Speaker B: I would say like you don't get those opportunities when you just come into Stanford.

So you put your heads down. And again, go back to ACADS, and I got lucky again that my professor was Professor Anoop Gupta, who was also an ex-alum of IIT Delhi. And then I got to know John Hennessy, and basically who was Anoop's mentor, and everybody there had the same mission. How do you take technology and then go create a company? So that were the beginnings of my entrepreneurial Dreams and connections. And then when we had built a prototype at Stanford to stream lectures, Stanford classes over the internet, that's where all the VCs started hovering around us.

And through my professor and John Hennessy, I got to start knowing these people 3 years after coming to the United States. I came in '92. So when we showed Netscape allowed you to browse the static web with text, and there was a company which was doing it with audio, and we pioneered video. That's when my interactions with all, uh, the VCs started. And then in Silicon Valley, one thing leads to the other and you become the actual entrepreneur. They come, they fund you, they mentor, they guide, and they help you build teams.

So that's how it happened. Speaker A: Who, who were the VCs that you ended up partnering with on that first journey? Because you've had— Speaker C: I— Speaker A: you'll have to remind me, but I think it's 3 companies in your, your history that you founded. Yeah, yeah. Speaker B: So I think like we were pretty atypical. Uh, basically a lot of VCs, uh, approached us and wanted to invest in the company. Uh, it was all the top-tier firms at that point, but we went a different route where we decided to essentially only do an angel financing round and raised half a million dollars in those days in '96 and built a product with first 30 employees and everybody was on a $30,000 salary, including the founders.

Then we raised our first VC round, the Series A, post-launching the product and the company. And that round was led by SoftBank Venture Capital, a gentleman named Gary Rishel. Systems invested, and so did a database company, Informix. And that was the only money we raised, an $8 million Series A, grew the company. And in 18 months of our existence, we were acquired by Microsoft to become the foundation of Windows Media. So again, it was a quick journey, started in '96 and we were acquired in June of '97 before the internet had become the internet, if you will.

Speaker A: You, I think, then spent a few years at Microsoft and you had the title of Chief Architect, which really is a very significant one. And I wondered if you could share a little bit about what it meant to have that role, what you were sort of doing at the time and what the challenges of the business that you engaged with were. Speaker B: So when I went into the VxStream, I was the Chief Technology Officer. VxStream gets acquired by Microsoft. Product division is called Windows Media. So I became the equivalent of CTO of that business unit.

And then you don't get CTO titles, you get the Chief Architect title, which is essentially the CTO of that business unit. But then 9 months after that, I got the opportunity to essentially become the CTO. Again, it was called a chief architect. I was only 28 years old, one of the youngest execs at Microsoft to lead Microsoft's internet business unit as the CTO, which worked with all companies in the ecosystem. It worked with the networking equipment vendors, it worked with ISPs, it worked with telcos, uh, essentially. So that's the unit which was responsible for cementing Microsoft's internet business with partners.

It wasn't direct-to-consumer, but it was B2B. And I ended up getting lucky not only to architect and defining Microsoft products for those kinds of customers, but also got the opportunity to invest in some of cutting-edge companies at that point. So we made investments in Akamai, we made investments in DSL providers, we made investments in telecom companies and partnered with many companies including Qualcomm and others. So, Essentially being at the center of that really helped understand how businesses are built and the role of partnerships and ecosystems. Speaker A: Hmm. That's, you know, I had seen that you had been involved in investing in those companies and I had wondered, you know, what exactly the capacity was.

Was that, you know, angel investing? But no, it was through this role at Microsoft. Speaker B: Corporate investing and sponsoring those investments. Speaker A: Fascinating. And so was that what sort of gave you the bug a little bit to, you know, move into venture capital, you know, a few chapters later, so to speak, or did it take a, you know, a few more encounters for you to really become interested in being on the other side of the table? Yeah, yeah. Speaker B: I think the way it worked is I left Microsoft to start my second company and that was iBeam Broadcasting, which was a video content delivery network.

That company also had amazing investors like Accel and one of the leading VC firms, Crosspoint Ventures, at that time. And that company went from an idea to IPO in 18 months because it was possible and then got acquired. Then I did a third company after that, which was infrastructure for SaaS companies. The world wasn't SaaS at that time. It was called application service providers. So we were infrastructure for any company to build the equivalent of a SaaS service for their customers. And then that company got acquired and I joined SoftBank Venture Capital.

Bhaktmi again had changed its name to Mobius Venture Capital. So I joined them. In 2003 as an entrepreneur in residence to work on my fourth company. And one thing led to the other, and I became an accidental VC where India had become an emerging market. And there was a lot of talk about how cross-border companies could be built, where some of the engine could be in India, but the markets are in US. Or the Indian domestic market will start absorbing technology. So I became an accidental VC from an entrepreneur in residence to a VC in 2004.

And I had always thought about being an entrepreneur, but having done 3 gigs, I felt this is an entrepreneurial opportunity to put together the firm's strategy of investing in the domestic market in India. but also how do you build global companies out of India with the primary markets being the Western world. Speaker A: As a brief detour, I did want to ask you a little bit about what you make of India's tech scene today, particularly sort of comparing, obviously there's been through such a maturation, I'm sure from when you were looking at it back in those days, but on, you know, the other side of the table, it still feels like there's a lot more that needs to happen, a lot more still to come, hopefully.

For this to become like, you know, a really dominant and globally powerful ecosystem. How do you think about it? Speaker B: Yeah, absolutely. So having been investing in India for over 20 years, I would say the long-term potential is there. And with the prevalence of mobile phones in India, everybody having broadband connectivity, the business-to-consumer market has done well, where there've been local e-commerce companies, local brands, which have been D2C over the internet, but there hasn't been any social network. That's where Facebook, Instagram, and the equivalents of WhatsApp have done extremely well.

But there have been many business-to-consumer companies that have been created, which are built on the internet, and are hybrid, which is they have a store, but the delivery is still offline. It started with products, then it has gone into food, and it has gone into many, many areas, if you will. And I was able to invest in some of the early internet companies like com, MakeMyTrip, and India's leading financial services portal. So those were some of the early investments. And then the second thing I realized is invest in technology infrastructure as the networks of India gets built.

So that's where we made an investment in a company called Tejas Networks, which was essentially Cisco or Lucent or Juniper built from India for India. Company has become a leading provider of networking equipment, not only in India now, but for global markets. So that was the second chapter. The third chapter was, hey, why can't you create software companies or product companies to sell into the Indian market? That hasn't panned out the way people had thought because the Indian market The buyers don't pay for software or human labor is cheap. Operational automation hasn't happened.

So the fourth wave was take the same companies and the markets are the Western world. So there, these cross-border companies, similar to what happened with US and Israel, we have had probably like 15, 20 acquisitions and IPOs which have been built that way. So I would say B2C has worked, domestic infrastructure for telecom and other infrastructure companies, and then cross-border companies. But the domestic market for software is still a laggard, if you will. Speaker A: Yes, that makes a lot of sense. I think, you know, it's been interesting to see the emergence of maybe a few deeper tech Indian companies over the past, let's say, 5 years where you're seeing some, you know, very few but interesting players in sort of space and even, you know, more defense and— Speaker B: Yep, and we are in one of them, right?

Like, so we have seen that, right? Like local market defense, but keep going, right? So you and I are on the same page. Speaker A: No, I think it's like, you know, hopefully the very start of, you know, that gets the momentum going and you see some of these companies really break out and seed the ecosystem a little bit. But then, you know, I'm curious how you think about the fact that, you know, India has historically obviously been a really important market for outsourcing labor. And now we are seeing some of these, you know, AI ITSM style plays that some are, you know, really building on the expertise in India.

And so you see, you know, folks that are leveraging the unique abilities of that market, but then others that are, you know, maybe pulling some of that capital away from it. Is that an opportunity in the sort of short term, or is that more of a threat in your view? How does India ensure that it captures part of that, the AI movement? And we'll talk more about AI in greater detail, but as we're on the topic. Speaker B: Absolutely. I think it's both an opportunity and threat. The opportunity, always, I'm an optimist, is bigger.

So there is an opportunity and it may not be for established companies who are outsourcing companies out of India, but the newer entrepreneurs who could be in the US or entrepreneurs in India, they could create an AI-native outsourcing company where it does two things. One, most of the repetitive work is done using AI agents, but still there are humans in the loop. On customer-facing and the work AI can't do completely. So you built a hybrid AI-native outsourcing company, not offshoring. And second, rather than charging per person per month, you change your business model to more an outcome-based and activity-based business model.

So that's the opportunity. The threat is many of the big established players are essentially public companies, and for them to change their business model from charging per month per employee to an outcome-based is not going to be easy. So that's the threat, but it's a massive market where with the advent of AI, there is a shortage of talent, there's a shortage of know-how. And anytime there is a new business wave, outsourcers do extremely well. And this happened with Y2K. This happened with internet. This happened with mobile. It happened with cloud.

So outsourcing will be a mega, mega trend where hundreds of thousands of companies will need help with talent. What remains to be seen is Outsourcing, how much does it get offshored and how much is being done with digital companions, what we called, uh, AI teammates at Mayfield, which are built on agent technology. So I'm very bullish on outsourcing. The question is how much of it is AI? Yes. How much of it is nearshore and how much of it is offshore? And the threat is pressure on offshoring. Speaker B: Absolutely. I think it's both an opportunity and threat.

The opportunity, always, I'm an optimist, is bigger. So there is an opportunity and it may not be for established companies who are outsourcing companies out of India, but the newer entrepreneurs who could be in the US or entrepreneurs in India, they could create an AI-native outsourcing company where it does two things. One, most of the repetitive work is done using AI agents, but still there are humans in the loop. On customer-facing and the work AI can't do completely. So you built a hybrid AI-native outsourcing company, not offshoring. And second, rather than charging per person per month, you change your business model to more an outcome-based and activity-based business model.

So that's the opportunity. The threat is many of the big established players are essentially public companies, and for them to change their business model from charging per month per employee to an outcome-based is not going to be easy. So that's the threat, but it's a massive market where with the advent of AI, there is a shortage of talent, there's a shortage of know-how. And anytime there is a new business wave, outsourcers do extremely well. And this happened with Y2K. This happened with internet. This happened with mobile. It happened with cloud.

So outsourcing will be a mega, mega trend where hundreds of thousands of companies will need help with talent. What remains to be seen is Outsourcing, how much does it get offshored and how much is being done with digital companions, what we called, uh, AI teammates at Mayfield, which are built on agent technology. So I'm very bullish on outsourcing. The question is how much of it is AI? Yes. How much of it is nearshore and how much of it is offshore? And the threat is pressure on offshoring. Speaker A: Yes, that makes a lot of sense.

You mentioned Mayfield, and I'd love to hear what actually brought you to Mayfield. I think you're now coming up on 20 years at the firm. Speaker B: Yeah, yeah, yeah. Speaker A: And it's such a firm that has such a history in Silicon Valley. I think 56 years in the making. Speaker B: Yeah, yeah, you have your memory right. A lot of people don't know we are one of the earliest early-stage venture capital firms, which was established in 1969. Speaker A: Yeah, I know that because of, you know, Thomas Davis, you know, was partner of Arthur Rock.

Speaker B: They started the venture capital business in 1961. It was called Rock Davis, the venture firm. Speaker A: So perhaps you can tell me how you ended up here and maybe a little bit of the characteristic of the firm that drew you to it. Speaker B: Absolutely. So Mayfield has been a top-tier firm And in the mid-2000s, as I was converting from an entrepreneur to a VC, I got to know the partners at Mayfield. And again, there was a gentleman, one of our senior partners who ended up becoming my mentor, Yogendra Lal.

He attracted me to Mayfield because he also is a people-first person. Deep mission, deep values, and the history of Mayfield, which related the most to me essentially was our founder, Tommy Davis, set the culture of the firm that we invest in people, not markets. So we bet on the jockey, not the racetrack. Many other firms just invest in markets. They don't care about the people. That didn't resonate with my values. And second, there was an opportunity to set Mayfield strategy of investing in India and from India for rest of the world.

And it was essentially a perfect marriage. And hence I've been here and this was the longest thing I've done and this will be my last job. So excited. So that's where culture, values, mentorship becomes extremely important. Speaker C: This episode is brought to you by Tezi, the AI agent for recruiting high-quality candidates quickly. When you're ready to hire, it's easy to lose weeks trying to find the right recruiting partner, building their context, and filling the pipeline. With Tezi, you can be up and running in minutes, not months. Tezi offers agentic AI recruiters that work 24/7 to fill your pipeline with high-quality candidates, handling all the recruiting busywork, from instantly reviewing applications to sourcing relevant talent, rediscovering hidden gems in your ATS, and even detecting fake profiles.

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You know, you talk about how there are other firms that are market-led. And, and some are people-led. And it really strikes me that the more you sort of understand how different firms parse those different signals, you understand the culture of the firm, the bets they make, why they succeed. So when Mayfield talks about being people-first, how does that functionally play out? Like, do you end up asking very, very different questions than a market-led investor might? Do you end up backing like a very different persona maybe than some of your peers might.

I'm curious, yeah, even in the very granular ways or minute ways that that sort of shows itself. Speaker B: Absolutely. So first, right, like every firm needs to have its north star and its focus. We, over the 56-year history, only do early-stage investing. Where either we invest at the idea stage or when the company has early metrics. So in that phase, most likely there's no market, there's very little data, there is no market maps. So it forces you, because necessity is the motherhood of all invention, to essentially focus on what matters.

And what matters at that stage of investing is really understanding the people, what drives them, what motivates them. Are they trying to build a company? They're trying to build themselves? What is their EQ? How secure are they in their skin? Are they playing a team sport or an individual sport? Do they have the vision, the hunger, and a set of values? So we end up spending a lot of time with entrepreneurs understanding that. And then it's a match. People who resonate, entrepreneurs to that kind of an investor, that kind of questioning, work with us and we work with such people.

And other cases, we don't have a product for people who are looking for just the highest price, a transient transactional relationship. It's not for Mayfield. So I would say The entrepreneur kind and age and where they come from doesn't matter. What matters is alignment on values and culture. And that can only happen not in one meeting, right? It happens by spending time together and both sides resonating to the value proposition and what the VC firm can bring because there are too many choices for entrepreneurs today. If you're a great entrepreneur, Essentially, you could— you should go talk to 10 firms, 15 firms, 20 firms, and figure out who's your right partner.

And are you looking for the price? Are you looking for value-add? Are you looking for people who'll watch your back and go with you all the way to an exit? I personally have invested in over 60 companies, and 58 times out of 60, the founders have taken it to an exit, whether M&A IPO, and two times the founder said, hey, we need a CEO and please help us get that CEO, right? One of them was HashiCorp, massive success. Founders are technologists. They didn't even want to manage anybody. And then there was another one called Gigya where one of the person who ended up becoming the CEO wasn't the founder, essentially is a partner at Mayfield today.

So I believe when I invest, focus on the people and do they have the EQ to either keep growing or if they're not, they'll pass the baton to somebody else who can do that job better than them. Because there's a difference between being a founder and a CEO for the right stage of the company. But founders have to bring that to you. I don't go tell them that. Speaker A: Yes. Uh, well, let's talk a little bit about AI. Uh, I know that you've spent a lot of time thinking about sort of what we might call the, the, the vibe coding movement and the prospect of there being, you know, 8 billion builders, as I think you like to say, uh, because of the, the advent of these tools.

Why is this something that excites you so much? And, uh, I suppose to put a, a more skeptical hat on. Why do you think this is a movement with real staying power that can produce truly massive companies from it? Speaker B: So first and foremost, right, we believe AI is a 100x force, which is going to democratize knowledge and expertise. And AI will manifest itself in the form of digital companions, not just tech tools, which elevate humans. To superhuman skills. And for the first time in the history of the technology industry, machines understand human language, which is very, very important because till now we had to learn some kind of programming to talk to these machines.

So we had to understand their language. For the first time, they can understand our language. And one of the things that it's essentially enabling is vibe coding. And I call it the 3 Cs are happening. First of all, the interface for building stuff now is conversational. Secondly, it's collaborative because human and machine are working together. And third, there is cognition, which is available where machines can not only research, they can think, they can plan and take action, which is the difference. So now what does it do? What it does is today there are 30 million developers who can build products, but there are 8 billion people.

And what it's going to do is to build a product. Or to create a company, a new wave of entrepreneurs are going to emerge, what I call builders or creators who don't need to learn how to code using some of the tools. And it remains to be seen which one wins. Do the model companies win or do the specialized vibe coding companies win? That to me is unclear, even to me. But what this technology does, it essentially democratizes expertise and engineering skills for everybody. Now, when you have a billion people trying to solve problems, the technology and the tools are going to be available in a collaborative, conversational, and cognitive way for them to go build company.

So that's what I'm excited about. I don't know which ones are going to become big. We are just at the start of the wave, but I won't just look at the companies which help you do vibe coding. A new kind of ecosystem, a new kind of economy is essentially built, getting built. What I would like to say on this podcast, we are entering an era of the vibe economy. Where using the Vibe Coding tools, many new companies will get created for both consumers and businesses, which could change the way we work, live, and play.

Now, what those are, we need to keep an open mind because it's not going to be clear. Anytime there is a new— when internet happened, so many new businesses got created. When the iPhone happened with smartphones, millions of apps got created. But it was only built by people who essentially knew how to code. They need to understand the iOS environment. They need to understand the Android environment, their technical framework like Swift, this, that. That's just democratized. So I think there's going to be millions of companies that are going to get created.

Some of them will be small lifestyle businesses, but many of them will be venture-scale opportunities. And It's Vibe Coding going to VibeOps into the Vibe Economy. So we are going to be vibing with everything and vibe, you know, like it's a warp to me, right? Like it's going to be like electricity, water, solar, that everybody will use these vibe tools and create companies that you and I can't even imagine what they will be today. Speaker A: Okay. This is very interesting. Because on the one hand, I think I'm a very optimistic person.

So am I. Also, and, yeah, like you, and I do get very excited about how we might use these tools to elevate ourselves and to create these new companies in this way. But there's part of me that worries that if we're just vibing, we're not really thinking that much. And a lot of these tools are almost so good at what they do, and they're still extremely imperfect, right? I'm sure you've, vibe-coded with a lot of these things and you can like hit your head against the wall pretty fast. Um, even though they're miraculous, right?

They can be sort of paradoxically both incredible and very frustrating. You quickly see that they, there's actually sort of abstracting the learning process and thinking process away from the person. And so I'm curious how you think, you know, as this accelerates, will we find places where we productively introduce friction for the user because it's important for them to somehow think about it, or will there be different sets of tools that are maybe more minded towards, I don't know, a more sophisticated engineer? We're already seeing that, but yeah, curious how you sort of reckon with those two pieces.

Speaker B: Absolutely. So first of all, right, the GenAI wave is very, very recent, and live coding tools are 6 months, 9 months, 12-month-old. They're still essentially brittle. So we are in a very early inning essentially of a marathon and maybe, right, like we are at version 1 of what the potential of version 10 is going to be. I think we are only 10% of the way. Now, as far as humans are concerned, we used to write documents. Using typewriters. We used to have calculators. But when tools like Microsoft Word, Adobe tools, Excel became available, look what humans have been able to do.

Our skills started getting elevated. So what's going to happen is using these tools, some of the commodity things or repetitive things we had to learn, are going to get democratized. And what's going to happen is now we'll start climbing the inference, the cognition ladder, and do things that we just didn't have time to do before. And that's what essentially I'm optimistic about. The common skills which you go to school to learn, these tools in engineering will help you do. But now, like what happened with Microsoft Excel, what happened with Microsoft Word, what happens with making documents using these tools, not only in coding but in all kinds of operational matters, whether it's for marketing, whether it's for creating blogs, you'll be able to take new ideas 100x faster and productize it.

So the skills you need will have to be augmented and upleveled to do new things versus the things we were used to doing. We have to just let go because if you don't let go of those, we're going to become dinosaurs. And that's where with this reskilling and upskilling, there's going to be opportunity and also threat on how some of us could just become extinct if we don't use these tools to uplevel ourselves. But we are 10% of the way on what these tools can do, right? So, but it's not going to take 10 years.

The pace of innovation is so fast that every 2 months, every month, every week, there's something new that within a couple of years, what's going to be possible is going to be mind-boggling. I can't even imagine what we'll be able to do. And that's what excites me. About this revolution being a 100x force compared to other forces we have had, which have been 10x, but it requires complete reimagination, upleveling of skills, or you can just become extinct. And none of the humans want to become extinct. And this is the vibe economy, which is going to be about knowledge workers, knowledge economy, where machines and humans team up, and it's teamwork, company building.

Solving any problem requires teams. We're not giving exams as individuals. We're trying to build stuff. So as you had humans team up with you, these tools you need to team up with to do things. And there's going to be a hierarchy where you do certain things where you're ahead of the tool. Tool might be ahead of you in certain things. So readjust, in a team and go create new things. What it is, like, let the imagination of entrepreneurs figure it out. Let them essentially do trial error. Let them try a bunch of things and something will stick.

Speaker A: Fascinating. You've talked also, I think, quite a bit about the opportunities you see in hardware, which has historically been a tough place for VC. What makes you excited about, you know, the current opportunities here and More specifically, what are the pockets that you're excited about? I know you've talked about cooling and all these different bits and pieces. Speaker B: Absolutely. So there was a meme 10 years back that in Silicon Valley, that software is going to eat the world. It already ate. And the reason was the general purpose microprocessor essentially was able to keep getting better faster, cheaper every 12 to 18 months using Moore's Law.

But over the last 5 years, Moore's Law started plateauing and we entered an age of application-specific computing with NVIDIA dominating with GPUs, which existed for just graphical offload. They pioneered the era of accelerated computing. And then first AI wave happened. Speaker A: Yeah. Speaker B: 10 years back. And then GenAI wave happened a few years back and it transformed everything. And if you look at the market cap of companies, the hardware companies have the biggest market caps today. It starts with NVIDIA, then it's followed by the cloud providers, the big 3.

Apple, Tesla, and Broadcom, which is a $1.6 trillion company not known to people. So if you look at the Magnificent 7, Magnificent 10, the vast majority of them are hardware companies because the spend on it is trillions of dollars per year. And once these roads for AI get built, value will start accreting above the hardware layer. So in the hardware layer, Mayfield has a thesis where with accelerated computing or AI accelerators being dominated with prominent players like NVIDIA and AMD, we have stayed away and shied away from investing in those.

Where have we invested or where have we been looking for new investments? The first area is connectivity, where the speed at which you're doing things, the network and the I/O is the bottleneck. How you connect GPUs within a rack, how do you connect inter-racks in a data center, and then from data center to data center. So we have made a bunch of investments in optical networking, IP-based networking, digital signal processors, RISC-V-based accelerators for solving these problems. But, and the second area we have been big believers in is 40 to 50% of the data center spend doesn't go in CapEx for hardware.

It goes into OpEx. And the vast majority of spend there is power, paying electricity, And power creates issues and heat, then it goes into cooling. So we have been investing in technologies which can cool chips, cool servers, so that you consume less of water, less of air conditioning. And then for the power loss, you need new kinds of power devices. So those are a couple of areas where, uh, we have been investing. And as we go along, many areas in and around the prevalence of GPU, how GPUs connect to memory, how GPUs connect over the network are going to evolve.

So it's essentially a very, very exciting opportunity. And photonics and optical is back because copper only connects a meter. To connect longer within the rack, cross racks, it's all going optics. Speaker A: For folks who maybe have not spent much time on photonics, can you sort of explain, when you say this is back, what exactly is back and why is that something that could be so powerful? Speaker B: Absolutely. So if you look at the internet, essentially connecting the internet to people's homes became extremely important. The backbone of the internet was built on optical technologies, not on copper wires, if you will.

Speaker A: Yes. Speaker B: And now whatever the telecom industry did or whatever the internet backbone was built, today connecting GPUs within a rack and connecting racks across, the bandwidth required is much more than the backbone of the internet. That's why optical is back and it's 10x needs of what it was before. Speaker A: When you think about, you know, looking at a movement like this, how do you start to place the sort of Mayfield people-first approach on it? Does it come from seeing a bunch of interesting talent go into these spaces and then you think, hey, actually there must be something here because, you know, all of these gifted people are working on cooling or on photonics or whatever it is, or is it, hey, you know, this, this will undoubtedly be a really important movement and now it's finding the best possible people who are, who are doing it.

Is there, you know, a bit of both happening at the same time? Speaker B: It's actually both happening at the same point. Essentially, to be a good or a great early-stage VC, you do need to have a prepared mind of understanding what are the bottlenecks, what are the new areas that need to get solved. But you can only have that perspective in certain areas of the tech stack. But at the same time, you need to keep an open mind. For new kinds of agents, new kinds of teammates, new kinds of applications for consumers and businesses that are going to get built.

So you need to be nimble of having a combination of a prepared and an open mind to be a good VC. So it's both. And new ideas is where you need to just listen and have listening skills and keep your ears open and let the entrepreneurs present and then dream along with them, not looking at why it won't work, but thinking through if it works, the chances are 100, 1,000, 110,000, what does the world look like? And that's where you need to have an open mind. The problems in hardware are more defined.

You need to have a prepared mind because those markets exist. The problems are known. The bottleneck is technology. So in the hardware layer, you can have a prepared mind, but what's going to happen at models? What's going to happen with apps? What's going to happen with agentic technologies? Things are going to get reimagined in every business function and every consumer need. So it's hard to Just have a prepared mind in that. So the only prepared mind can be, these new opportunities will happen, be on the lookout. And when they come, spot the right ones.

And if there is founder market fit and founder Mayfield fit, just go. Speaker A: Amazing. Speaker B: FMF. Speaker A: There you go. You mentioned that you've made a lot of bets in this space, given the demand, you across the AI stack, but especially when we're talking about some of this infrastructure stuff. Do you see these companies follow these sort of wild trajectories that we've seen on the software side? Like, are these companies, you know, sort of racking up hundreds of millions of revenue in record time, or does it operate a little bit differently?

Speaker B: It depends where you are at the stack. I would say the wipe coding tools in general are an anomaly. In the agent space. Developers is the space where things have just gone hockey stick. In most of the other areas, things are growing faster than they did with SaaS at the software level, but not 1 to 100. Now let's talk about hardware. Actually, the growth there is 10x of what some of these software agents are doing. And the main reason is A trillion dollars are being spent on infrastructure. So if you go to a hyperscaler, any of them, they're spending $80, $100, $150 billion a year on infrastructure.

20, 30% of it goes to NVIDIA to win with them. The order could be a billion dollars order to deliver over the next 3 to 4 years. Mayfield has been part of some stealth companies. Which haven't even announced that they exist. And within 12 months, they have had multi-billion dollar orders where now they need to put their head down and go execute. That's the scale of the hardware opportunity. It's not hundreds of millions of dollars when you launch, it's in billions of dollars. And if you can't deliver on that, you're not even going to get $10 million because you're wasting time.

With 50 to 60% of the IT buying happening by 7, 8 of these hyperscalers, you have to play at that scale. Speaker A: That's mind-boggling. You've sort of stumped me with that because it's such a, that's so anomalous. What is the product development timeline for these companies? You get this sort of order that's so massive. Is the idea that you might even be able to fulfill it within a couple years, or is this something that, you know, I don't know, you have to be thinking 3, 5 years ahead. Speaker B: So I would say, first of all, to build these products from the time the idea starts, could be 18 months, could be 24 months, could be 36 months.

So when you have the design, it's there within 12, 18 months, you start getting into the R&D or the trial phase with these hyperscalers. Once your product is solid, you're supposed to ramp in year 1 of production to $100 million in revenue or orders, the next year to $300, $400 million, the next year to $800 million to a billion. So the billion journey, you can win the contract, you have to get there within 3 years of shipping that. And that's where operations, manufacturability, supply chain becomes extremely important because this is not a cloud-based product or an agent that you just launch and magic happens, right?

You're shipping atoms, you're shipping hardware. And basically, so the complexity is 10x of a software play. Speaker A: Wow, fascinating. Well, as we sort of reach the end of our discussion here, I always like to To end with a few more philosophical questions, if you had unlimited resources and no operational constraints, what's an experiment you would like to run? Speaker B: The experiment I would like to run is Mayfield has this concept called the Mayfield AI Garage, which we are running at universities to essentially give philanthropic money along with our cloud provider partners and NVIDIA to students where they can get stipends to go try building new things.

So I would like to run that globally at hundreds of universities, but money, time, and resources is the issue. So that's what I would say. How do we take the AI Garage and put students getting money, stipend, compute credits to become builders of tomorrow? Let them tinker with what's possible with this technology. Speaker A: Yes, that's a great idea. And then as a final question, if you had the power to assign a book to everyone on Earth to read and understand, what would you like to assign? Speaker B: This is essentially to every human, or is this to just entrepreneurs?

Speaker A: You can give us two answers. That might even be better, you know, one for every human and one for perhaps just the entrepreneurs get a second recommendation from you. Speaker B: This is essentially to every human, or is this to just entrepreneurs? Speaker A: You can give us two answers. That might even be better, you know, one for every human and one for perhaps just the entrepreneurs get a second recommendation from you. Speaker B: Sure, sure. The first book I love for every human is Outlive. And the reason is health, well-being is very, very important.

And to be able to have impact, essentially, you need to be healthy. You need to bring your best self to a school, to a college, to work, to a startup. So having that healthy balance in being centered is very, very important. And as far as the entrepreneurs are concerned, I love an old book called Build to Last. How do you create sustainable companies? How do you create durable companies? And the key thing that book teaches you is start with mission, vision of the company, write it down. What are your core values?

And then work on strategy because your mission and values and vision can't change that much, but your strategy and tactics can change. So get that foundational layer right, and then think about running a marathon. Think about what your company will do in 10 years, 20 years, 30 years. Play the long game. Speaker A: That's a lovely message to end on. Naveen, thank you so much for taking the time with me. It was amazing to learn from you, and I really appreciate it. Speaker B: No, thank you for having me here, and hopefully this would add some value and perspective to your audience.

Thank you. Speaker C: That's it. Thank you for listening to this episode of The Generalist Podcast. Please subscribe on Apple Podcasts, Spotify, or your preferred podcast app. Ratings and reviews help others discover these discussions, so if you enjoyed the conversation, I'd be grateful if you could take a moment to leave one. For all past episodes and more, visit us at com. See you next time as we continue to explore the future.