1Mby1M AI Investor Forum: Piyush Kharbanda, General Partner at Vertex Ventures (Part 7)

Sramana Mitra: I see. I’m going to go a little bit to a 30,000-foot level and ask you to comment on what else you’re seeing in India that we should keep in our vision, in terms of trends or developments or concerns. What’s going on?

Piyush Kharbanda: Let me start with a little bit of concern that we run into as investors. I think this is exacerbated in the AI world a little bit more. There’s a tendency to build me-too products and applications and the fast follower approach to building applications and so on.

I think that’s a little bit of a challenge for the ecosystem in general. It’s been like this for a while. We’ve had sort of fast follower approach on application development.

Sramana Mitra: India has always been fast follower, India has always been concept arbitrage.

Piyush Kharbanda: I do think though, that the concept arbitrage worked in a specific kind of a GTM. It doesn’t necessarily work very well in the AI ecosystem where capital is really not going to help create a moat or create any differentiation. It used to be a function of specific kind of GTM and much better quality of service. I think both of those are sort of getting disintermediated or removed with AI.

With AI, I think this approach is a little bit behind the times now. We’ll still see high quality companies being built, but that’s a little bit of mentality thing that we see. It’s not in every startup. I don’t mean to say that it is pervasive, but it exists.

The interesting bit is that we are starting to see market leadership companies that are first to market with products. That’s exciting.

We have Attentive, they’re probably the first to market with AI for construction estimation. There really isn’t anyone who’s doing this. We have companies that are building AI first headless applications for specific industries, and those are markedly exciting. And they’re going after incumbents with business models that incumbents can’t challenge, which is outcome led, very specifically focusing on revenue side problems that incumbents have not been able to address.

That is the exciting part. The other side of it is the challenge that we deal with.

Sramana Mitra: So an example like Attentive, that’s a deep domain knowledge driven company, right?

Piyush Kharbanda: It’s a company that sort of listens to the customer, builds very fast, takes a product out to market, gets feedback and iterates rapidly. I think that’s what is needed. If you are first to market in any segment, sector, et cetera, you need to work like that.

Sramana Mitra: Yes. This’s my last question before we switch to the entrepreneur pitches. Any insights on go-to-market motions that you’re seeing that are working particularly well?

Piyush Kharbanda: I do think that the AI SDR approach in certain markets is working. It is not necessarily a solved problem. A well-oiled SDR machinery might work better than an AI SDR, but for early-stage startups, I think this whole AI SDR approach is leveling the playing field.

If used well with high quality content, well-thought out ICPs, well-orchestrated workflows on what to do, how to target, and good oversight by a smart team member to give good quality feedback, it can result in a very high-quality top of the funnel.

The other thing that’s happening is that once the top of the funnel is generated, like you said earlier, the tendency to buy in both the mid-market and the enterprise is actually much higher than it’s been before. Especially if it’s here. It makes life easier.

So, what you’re seeing as an outcome is that sales efficiency is higher than before.

Sramana Mitra: The one that I’m watching with a lot of curiosity and excitement is what’s happening where people are just putting something out there in the open-source domains and that becomes the lead magnet. Then you provide premium software on top of that to build the real revenue flow. That’s been the commercial open-source model for a long time. It has always been a very attractive model. But now with AI, that one is actually doing really well.

Piyush Kharbanda: Still early days in India, very early days in India.

Sramana Mitra: Okay. We’ve seen a couple of cases, before AI actually. We’ve seen a couple of companies come out of India in that mode.

So, that’s a very interesting conversation. We need to check back in six months because things are moving so fast and so much is happening.

This segment is part 7 in the series : 1Mby1M AI Investor Forum: Piyush Kharbanda, General Partner at Vertex Ventures
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