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 🚀 Welcome to SCALE’s Insight Round-Up!

Welcome to our round-up of insights from world-class investors such as Sequoia Capital, a16z, General Catalyst, Insight Partners, ICONIQ, and many more, all in one place.  

In this edition we cover:

• 🤖 Everything in AI: the hot topic discussed at the VC dinner table

• 📈 Growth Strategies: uncovering the secret sauce behind growth

• 📈 Market Dynamics: investments and market perspectives

• 🐐 How can ExpressPros support your business?

The AI Supply Chain Tug-of-War

Sequoia examines the complex dynamics in the AI supply chain, focusing on the tension between demand risk and profit capture. Big Tech companies are currently absorbing much of the demand risk, driving increased capital expenditure throughout the supply chain. This creates a tug-of-war between different layers, from foundries to cloud providers to end customers. Sequoia explores specific conflicts at various levels, such as TSMC's capacity planning for Nvidia and negotiations between cloud companies and AI research labs. Currently, Big Tech acts as a risk absorber by making large orders, funding research labs, and offering low prices to end customers. However, this equilibrium is fragile; if Big Tech reduces its risk absorption, it could lead to a significant decline in demand throughout the AI supply chain.

👉️ Click here to read the full article: The AI Supply Chain Tug-of-War

The New Code of Big Law

Battery Ventures explores the main areas that artificial intelligence can redefine the legal industry, and key buying parties. These foundational capabilities (primarily analysing and summarising vast and complex amounts of data) will be most relevant in i) legal research and review (allowing lawyers to formulate arguments quicker) ii) contract drafting / negotiation (Ontra, a scale-up in the space, already manages 90% of drafting for clients), iii) patent disputes (the average US patent dispute costs $2-4m in lawyer fees, an area ripe for tech disruption given how complex this is). The key buyers in this space are split by size (# of FTEs), which means that while a larger law firm will be able to spend more, they will also need more tailored solutions to their internal processes. Mid/small size law firms hope to use AI to become an “AI-first” service.

👉️ Click here to read the full article: The New Code of Big Law

AI Adoption in Start-Ups

General Catalyst surveyed their portfolio companies to gauge the level of AI investment (building AI tools/products) vs AI deployment (using AI in actual production). While most of their portfolio is currently investing in AI tools, the gap to actual usage of AI in production remains quite large. Specifically, (as expected) businesses in industries with more stringent regulation (i.e., healthcare, financial services) are much slower at adopting AI tools, whilst the larger a company is, the more likely they are to investing in AI tools. OpenAI remains far and away the dominant player, with 89% of respondents using its services. Key roadblocks to adoption going forward are i) reliability of AI output ii) integration with existing tech-stack iii) regulation iv) lack of AI-trained personnel.

Unleashing Web3 & AI: The Next Digital Revolution

Alumni Ventures discusses how the convergence of Web3 and AI is set to transform digital ecosystems by focusing on several key areas including: (i) Smart contracts and tokenization will automate AI services and secure decentralized data exchanges; (ii) Cross-chain interoperability and standards will ensure seamless integration between AI and blockchain technologies; (iii) Decentralized identity solutions and data governance models will enhance user control and privacy; (iv) Financial developments like the Bitcoin ETF and Bitcoin halving are expected to drive investment in blockchain, accelerating Web3 and AI infrastructure. The article also highlights startups that are pioneering these integrations, showcasing practical applications in creating more decentralized and user-centric digital environments.

👉️ Click here to read the full article:  Unleashing Web3 & AI

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📈 Growth Strategies 

Early-Stage Sales: Four Tips for Startups

Early-stage B2B startups face unique challenges in building their sales strategies. Menlo Ventures offers four critical tips: (i) Focus on what customers are 'buying' and not what you're 'selling': consider how your product maps into the rational goals and needs of the people you’re selling it to (e.g., individual procurement KPIs). (ii) Understand how customers 'want to buy' vs 'how you want to sell': organise your sales process around how companies make decisions (e.g., understand how you can support your client to get buy-in from their boss). (iii) Use a sales deck: do not pivot your fundraising deck into a sales deck - you will need to articulate actual & demonstrable impact for customers, (iv) Exploit asymmetry: don't be afraid of incumbents - be precise on how you add value that incumbents are unable to deliver today.

👉️ Click here to read the full article: Early-Stage Sales: Four Tips for Startups

Pricing and Packaging Additional Products

Pricing additional products requires careful consideration to maximise revenue without alienating customers. a16z advises startups to focus on three learnings: (1) The pricing model for your first product shouldn't dictate your approach for your next: don't be closed off to alternative pricing models if it's more suitable for the market/customer you are trying to serve (note - you may need to build a new GTM & tech stack to service the new approach). (2) Be crisp on your segmentation to avoid cannibalization when launching a new product: growth-stage businesses need to be clear on which customer segments they are service to ensure that they are truly tapping into adjacent markets, (3) Build a deep understanding of willingness-to-pay for your product: 50-100 customer interviews can be used to develop a signal on how to price your new product (e.g., as a market leader you may be able to charge a premium vs what you expect as customers are willing to pay the premium for your brand already)

👉️ Click here to read the full article: Pricing and Packaging Additional Products

How to Activate the Developer Relations Flywheel with the ‘Why-Try-Buy-Fly’ Method

Developer relations (DevRel) is essential for companies building platforms or tools for developers. Bessemer outlines the ‘Why-Try-Buy-Fly’ method to activate the DevRel flywheel: (1) Why: Start by clearly communicating why developers should care about your product. (2) Try: Provide easy access for developers to try the product, with ample documentation and support. (3) Buy: Once developers are engaged, make the transition to purchasing smooth and value-driven. (4) Fly: Finally, enable successful developers to become advocates, creating a self-sustaining cycle that attracts more developers and drives growth.

👉️ Click here to read the full article: How to Activate the Developer Relations Flywheel with the ‘Why-Try-Buy-Fly’ Method 

📈 Market Dynamics

Consumer Bottlenecks in Mental Health 

NEA delves deep into the growing mental health crisis and how the start-up community can tackle it. Increasingly, the largest bottleneck faced by today’s population is not forming relationships but engaging in meaningful discussions with them. Whilst access to mental health providers has improved dramatically, the key challenges remain a) affordability b) # of qualified personnel. Technology (and AI specifically) can work to optimise back-end processes, therefore lowering cost and freeing up personnel time to increase the number of clients served. Read on to learn which scale-ups are currently focused on improving mental health outcomes.

👉️ Click here to read the full article: Consumer Bottlenecks in Mental Health

 Huntress: Cybersecurity for the 99%

Kleiner Perkins recently led the Series D into Huntress, a business aimed at cybersecurity for the 99%. Whilst initially cyber-threats were only a problem for enterprises with large “attack surfaces” (more software/hardware that can be infiltrated), now smaller businesses are being attacked as they have technological “attack surfaces” but no resources to defend them. Huntress makes this a losing fight for hackers given their best-in-class software, a team of 24/7 human threat monitors, and an easy-to-install and lightweight software.

👉️ Click here to read the full article: Huntress: Cybersecurity for the 99%

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