As generative AI explodes the company-building rules, founders backed by NEA identify 4 key emerging trends.
With interest in generative artificial intelligence reaching a fever pitch last fall, Perplexity AI co-founders Aravind Srinivas and Denis Yarats knew they had to act fast. They didn’t have weeks or months to hire talent, so they dispensed with recruiters, scheduling interviews and culture-fit discussions. Instead, they took a more straightforward approach:
They’d offer prime candidates a paid two-week trial.
The plan worked. Perplexity hired co-founder Johnny Ho, who joined as chief strategy officer after just a few days. Other than fourth co-founder Andrew Konwinski, all of the company’s employees have been hired this way. Besides the time saved, the process weeds out people who weren’t likely to join anyway and does a better job of generating passion for Perplexity’s mission than any speech or incentive package could match. “Now I hear that other companies are using this trial basis recruiting,” says Srinivas.
Since the release of viral chatbot ChatGPT last November, venture-backed startups like Perplexity have had to toss out parts of the company-building playbook and embrace new ways of thinking. From fundraising to product development to customer service, many time-honored practices will seem antiquated in just a few years, says NEA partner Ann Bordetsky: “We’re in the primordial ooze stage, and things are kind of messy and experimental. But you can see that people are assembling a new approach.”
It won’t be the first time a breakthrough technology has prompted profound changes in how great companies are built. Along with inventing the PC, founders like Steve Jobs and Bill Gates invented new rules for making, marketing, and selling complex digital technology. So did Amazon, Yahoo and countless Internet startups in the 1990s, Facebook and other social networking companies in the wake of the smartphone, and Salesforce, Box, and other SaaS providers courtesy of the cloud.
As one of Silicon Valley’s most established venture firms, NEA has been on the frontlines of each of these revolutionary technology shifts. And if there’s one thing the firm has learned over the past four decades, it’s that disorienting times like these often generate some of the most successful, influential companies in the world.
“Each of these technologies enabled business model innovations that weren’t possible before,” says Scott Sandell, NEA chairman and chief executive officer. The internet, for example, made open source viable and made it possible to deliver software as a continuously improving service rather than a licensed product—for free, if one chose. “It changed the model for developing software, for distributing software, and for getting paid for software,” says Sandell. “That’s the kind of impact I believe AI will have, as well.”
If anything, AI’s impact will be even greater, says NEA partner Aaron Jacobson. While previous upheavals involved how and where technology could be used, “AI is actually shifting who does the work,” he says. “That’s never happened before, so this disruption will be faster, fiercer, and bigger than ever since more is up for grabs.”
The generative AI craze is less than a year old, but so much has happened that we can already discern the outlines of how company building will change in the months, years, and possibly decades to come. To better understand this historic transformation, NEA asked four founders of AI startups in its portfolio to share examples of their new thinking. From those discussions, we’ve identified four emerging trends that will likely define company building in the unfolding AI revolution.
As generative AI explodes the company-building rules, founders backed by NEA identify 4 key emerging trends.
With interest in generative artificial intelligence reaching a fever pitch last fall, Perplexity AI co-founders Aravind Srinivas and Denis Yarats knew they had to act fast. They didn’t have weeks or months to hire talent, so they dispensed with recruiters, scheduling interviews and culture-fit discussions. Instead, they took a more straightforward approach:
They’d offer prime candidates a paid two-week trial.
The plan worked. Perplexity hired co-founder Johnny Ho, who joined as chief strategy officer after just a few days. Other than fourth co-founder Andrew Konwinski, all of the company’s employees have been hired this way. Besides the time saved, the process weeds out people who weren’t likely to join anyway and does a better job of generating passion for Perplexity’s mission than any speech or incentive package could match. “Now I hear that other companies are using this trial basis recruiting,” says Srinivas.
Since the release of viral chatbot ChatGPT last November, venture-backed startups like Perplexity have had to toss out parts of the company-building playbook and embrace new ways of thinking. From fundraising to product development to customer service, many time-honored practices will seem antiquated in just a few years, says NEA partner Ann Bordetsky: “We’re in the primordial ooze stage, and things are kind of messy and experimental. But you can see that people are assembling a new approach.”
It won’t be the first time a breakthrough technology has prompted profound changes in how great companies are built. Along with inventing the PC, founders like Steve Jobs and Bill Gates invented new rules for making, marketing, and selling complex digital technology. So did Amazon, Yahoo and countless Internet startups in the 1990s, Facebook and other social networking companies in the wake of the smartphone, and Salesforce, Box, and other SaaS providers courtesy of the cloud.
As one of Silicon Valley’s most established venture firms, NEA has been on the frontlines of each of these revolutionary technology shifts. And if there’s one thing the firm has learned over the past four decades, it’s that disorienting times like these often generate some of the most successful, influential companies in the world.
“Each of these technologies enabled business model innovations that weren’t possible before,” says Scott Sandell, NEA chairman and chief executive officer. The internet, for example, made open source viable and made it possible to deliver software as a continuously improving service rather than a licensed product—for free, if one chose. “It changed the model for developing software, for distributing software, and for getting paid for software,” says Sandell. “That’s the kind of impact I believe AI will have, as well.”
If anything, AI’s impact will be even greater, says NEA partner Aaron Jacobson. While previous upheavals involved how and where technology could be used, “AI is actually shifting who does the work,” he says. “That’s never happened before, so this disruption will be faster, fiercer, and bigger than ever since more is up for grabs.”
The generative AI craze is less than a year old, but so much has happened that we can already discern the outlines of how company building will change in the months, years, and possibly decades to come. To better understand this historic transformation, NEA asked four founders of AI startups in its portfolio to share examples of their new thinking. From those discussions, we’ve identified four emerging trends that will likely define company building in the unfolding AI revolution.
