Chris Dixon on competing with Internet giants for budding AI and VR talent

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Source:   —  April 13, 2016, at 8:50 PM

As he noted in a recent post, new cycles tend to start every ten to fifteen years; assuming the two thousand seven introduction of the iPhone kicked off the latest wave, we’re quick heading toward the Following New Thing.

Chris Dixon on competing with Internet giants for budding AI and VR talent

VC Chris Dixon of Andreessen Horowitz thinks it’s a lot harder to predict financial cycles than it's to look a new computing platform coming down the pike. As he noted in a recent post, new cycles tend to start every ten to fifteen years; assuming the two thousand seven introduction of the iPhone kicked off the latest wave, we’re quick heading toward the Following New Thing.

Or things, technically, according to Dixon, who we caught up with yesterday. Among the trends that Dixon is watching closely, he says, are virtual reality, augmented reality, IoT, wearables, drones and cars. (Lost from the list: bitcoin, which has long held Dixon’s fascination but that he refers to as a “long-duration project.”)

Not that it’ll be simple to create money off these newer technologies. In fact, Dixon suggests it could be ridiculously challenging, given how quickly Facebook, Google, and Amazon are bringing aboard related talent. Here’s more from yesterday’s interview, edited for length:

TC: People think of you as the person at Andreessen Horowitz who invests in weird stuff. 

CD: We obviously invest in a wide range of things. My own area of interest has been in drones and VR and AI and maybe more speculative categories. Some startups, the question is more about ‘Will this startup win versus other solutions,’ where, in speculative categories, the question is whether it’s going to work at all.

You can kind of jokingly call it weird, but if you see at where Amazon, Facebook, and Google are investing — I think Google’s VR team is significantly bigger than Facebook’s; Microsoft has 1.500 people working on HoloLens; and from what I can tell from its hiring and acquisitions, Apple is [investing a lot of money] — probably the biggest area [of interest and investment] is AI. Large tech companies are investing very heavily in this stuff [whereas] there’s much less investment by VCs.

TC: Because VCs don’t realize the tech or else the opportunity?

CD: No, because it’s tough to figure out where the start-up opportunities are and because [some of this tech] requires so much money. With virtual reality, you've to construct a complex platform then line up content partners. Or self-driving cars — I’d assume that Google has spent many billions of dollars on it already, including mapping. The venture world isn’t set up for that. It works around the model of seed rounds, A rounds, $twenty million B rounds, not for massive projects. It’s kind of a puzzle if you’re in VC how to create those investments.

TC: You’ve remarked  before how quickly teams are getting snapped up, which should compound the issue.

Wit. ai [a Y Combinator startup that built voice-activated interfaces] that Facebook bought and now powers its Messenger platform was only [in our portfolio] for a few months when Facebook bought it.  It sounds paradoxical, but our model depends on companies staying independent for a period of time, and because large companies have been so aggressive, it’s harder for us.

When it comes to machine learning, you’re competing with offers from Facebook and Google and Amazon and [their offers] are considerably higher in terms of cash compensation. They pay a lot for people with that expertise, and startups will never [be able to match it]. So you've to really convince people that what you’re building is important.

TC: VCs can’t wait out this following computing cycle obviously. So how do they nurture lower-capital models?

CD: With self-driving cars, for example, there are numerous approaches that startups have taken to overcome that capital advantage. Some startups are starting on private campuses — colleges, corporate campuses, military bases — where you can go at a slower speed so it’s less technically challenging because you've sufficient time to stop and the regulations are controlled by the campuses.

Some companies, love [our new portfolio company] Comma. ai and the public Israeli company Mobileye are starting with driver assist, which is semi autonomous. If you can obtain your advanced cruise control on the hwy and get your system out there, most of the products will obtain better because they’re pulling in sensor and optical [and other] data and their systems are getting better.

Others are just raising a bunch of money. I think Cruise [the self-driving tech company acquired latest mo by Common Motors] was on the path to probably go and lift more money.

TC: Your new investment in Dispatch, which makes last-mile delivery robots, is interesting. How large an opportunity is that, do you think?

CD: It’s early and we don’t precisely know, but if you speak to people who create deliveries to college campuses, they obtain lost looking for dorm rooms. So I think in the close term, we’ll look partial solutions where the delivery person might drop off mail or food at a central depot where [he or she] doesn’t have to worry about parking, the small bots will do the latest bit of it. If you did that on college campuses, corporate campuses and military bases alone, it’s a big opportunity.

TC: What about drone delivery? 

CD: I think [that opportunity mostly centers on] photos and capturing imagery for inspections and other things. I think drone delivery would be really expensive. The batteries are the biggest expense; they can be used [just] two hundred times. The math is probably $5 per delivery. It probably makes sense if you really wish something right now, love medical supplies. So there are a bunch of fascinating utilize cases. But I think the ultimate solution will be a combination of things: drones for emergency medical supplies, automated trucks for longer deliveries, ground drones for local deliveries. I think love today, it’ll be a patchwork.

TC: How many boards are you on and how many companies do you look a week?

CD: I’m on tenth boards and [former TechCrunch writer] Kyle Russell, who works closely with me — we probably see twenty companies a week?

TC: Given that you’re looking at a lot of nascent tech companies in VR and AI that don’t necessarily know what they’ll be when they grow up, how do you avert conflicts?

CD: The best we can do is get what they’re working on and attempt to project it out and create a prediction. But in the cases where [companies become] really successful, it’s tough to know. Number one would've predicted 20 years ago that Google would be building cars. We just attempt to be respectful of the entrepreneurs. We wish them to perceive love we’re one hundred % supporting them. But it’s hard because companies modify directions a lot.

TC: You were a very visible proponent of bitcoin in recent years. Are you still?

CD: It’s a small frustrating. [There are] disagreements in the bitcoin developer community about the path forward. I  think using cryptography to expand a new currency is a long term project. A lot of these things — VR, bitcoin, autonomous cars — they’re tough and they get a while. I’m on the board of [bitcoin wallet provider] Coinbase and they’re doing well. They planned accordingly; they expected this would get a long time.

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