E493 | Joe Seager-Dupuy & Mike Martin, True Global: Why Consumer AI Is Europe’s Next Breakout Frontier

0:00The consumer tech graveyard is littered with yesterday's darlings, But something is stirring beneath the wreckage. It's been a tough few years, but the sector is truly reshaping how consumer businesses have built and scaled. While investors fled to safer B2B bets, the consumer landscape was quietly transforming. The pain was real. You've got peak D2C brands in COVID, which drove crazy valuations, you know, pricing them like tech companies. But beneath the wreckage, a new foundation was forming. The moment when artificial intelligence meets everyday consumer friction. What captivates the imagination on the consumer AI stuff is just the kind of macro why now that it presents to really rethink existing consumer experiences and in fact open up entirely new consumer markets.

0:44Smart money is recognizing a pattern for specific battlegrounds where AI doesn't just improve, it obliterates the old way. So just to summarize what you're saying is that we've got fragmentation, opaque markets, complex service, supply constrained services. the results speak for themselves. When founders crack the code. When we look at even some of the big outcomes consumer facing businesses, and it's just because they have that capacity to scale and grow very, very quickly when you get it right. But here's the kicker. Once your AI knows you intimately, switching becomes unthinkable. But still fundamentally, I think if you're building up a pattern where you feel like your AI assistant or agent knows you well, then the switching costs there are just massive over time.

1:25The question isn't whether AI will reshape consumer markets. It's whether you'll capture the upside or watch from the sidelines as others build the empires of tomorrow. Hear the complete playbook from Joe and Mike at True on this episode of the EUVC podcast.

1:58Whether it's supporting visionaries or maximizing returns for your LPs, our tech-driven and comprehensive solutions empower you to achieve your goals with confidence. Partner with Ace Alternatives to streamline your operations and elevate your fund's success.

2:15Tear down this wall. It's more than just an ally. This is a union of values. Let's start acting. This show is not investment advice, and the hosts of this episode may be invested in the funds and companies featured. Welcome back, everyone, to another episode of the UBC Podcast. As you know, we're here to connect and champion the voices moving European venture ahead. And today we're joined by Joe Seeker-Dupuy. I don't know if I pronounced that correctly. Seeker-Dupuy, yeah. Was that beautiful? Yeah, perfect. Thank you, Joe. And Mark Martin, that was easier. General Partners at True, a London-based investment firm with nearly$1 billion under management, investing across venture, private equity, and public markets with deep sector focus on consumer and retail.

3:03As you all know, or maybe you don't, consumer is back, at least to some of us who love AI and can see the incredible leaps forward that is happening right now. It's been a tough few years, but the sector is truly re-emerging as a hotbed for innovation. Household spending makes up 60 % of OECD GDP, which means that there's more than$15 trillion in Europe alone. And we now are seeing AI reshaping how consumer businesses are built and scaled. Joe and Mike, today we are breaking down why the timing is right, where the biggest shifts are happening, and how they're bagging their next generation of standout consumers, founders across Europe.

3:41Gentlemen, did I do some bit of credit to everything we're going to talk about today? Yeah, thank you. Beautiful. So to anyone thinking, ah, could we have a bit more on True? We have done an episode solely on the True firm before. You can go and check that out on the Spotify playlist or Apple playlist, wherever you are. There's also, we've built a repository, a database of all the managers that we're interviewing here on the podcast, where we'll also have Mike and Joe featured with True. So definitely go and check that out. We're going to review all the materials there, which I think is super exciting.

4:18But today we're going to talk consumer. Gentlemen, first and foremost, for those that didn't listen to the other episode yet, what is it about consumer that's exciting right now? Yeah, look, thanks, Andres. Appreciate you having us on. I guess I think maybe stepping back is useful to touch on something that you mentioned in that it's been a tough, tough few years for the consumer sector in general. And I think also, I think consumer has always been a bit harder from a venture perspective as well. I think people tend to dip in and dip out of it, depending on the sentiment of what's going on in the broader macro environment and consumer confidence more broadly.

5:00Which I think if you're not in it all the time, it can be quite tricky to build consistency and confidence and a really deep understanding of the market and what's going on. Specifically, I think the last few years has been just a crazy time more broadly and a bit of a perfect storm for headwinds for consumer companies. You know, you've got peak D2C brands in COVID, which drove crazy valuations, you know, pricing them like tech companies. And obviously that was priced not unlike other sectors as well at the time because everything was crazy with so much money coming into the market. But for consumer businesses also created loads of unpredictability and demand for goods, everyone being at home and then suddenly not being at home through COVID lockdowns and things like that.

5:49And then I think secondly, you had digital acquisition for customers online exploding and not being helped by Apple making changes to user targeting and things like that. And also finally, I think sort of negative perceptions of the sector driven by macro challenges and sort of geopolitical uncertainty and things like that. Just been super, super hard, particularly for those companies fundraising. So it's been one of the very few categories which is probably down from a VC funding perspective if you maybe look back five years or something like that. But yes, your point is coming back. I think the emergence of AI is definitely driving a lot of that excitement and some hype as well.

6:36You know, just if you cast your mind back to, this is a couple of years ago, ChatGBT launching, that was probably the real trigger that brought AI to the mainstream for consumers. And things have really accelerated from there. You know, we're seeing AI native companies being built across all categories. I think the developments of large language models, so LLMs, means that consumers are able to interact with digital products in a much more meaningful and natural way. So it's both changing the consumer behavior of how they interact with products, but also changing the way that founders are able to build products to kind of leverage that behavior.

7:18And they obviously will change depending on the product or the service, the occasion and everything. but being able to interact with your devices or software with either text or voice, generative AI, being able to make companies provide these products and services a much more effective way for consumers to interact with, I think is kind of pretty game-changing. And so that's definitely been a huge driver of the resurgence in the market, definitely from a funding standpoint on the VC side, but also from an adoption standpoint for consumers getting excited about that. I think just to answer that, when we take a step back, and Mike mentioned it there, I think the kind of narrative around consumer being hard is definitely true.

8:05And I think Forerunner put out some research that consumer startups were less likely to get to Series B than enterprise startups. What's interesting is the ones that do are then much more likely to IPO and to IPO evaluations that are much larger than the enterprise players. So whilst it's probably a higher failure rate, I think the scale of the outcome on offer for getting it right in consumer is just fundamentally different ballgame. And when we look at even some of the big outcomes out of the European venture ecosystem, whether it's Spotify or Revolut or Monzo, a lot of the outcomes have been consumer facing businesses.

8:44And it's just because they have that capacity to scale and grow very, very quickly when you get it right. And so So I think it's maybe easier or it's safer at times to tend towards the mechanics of more well-trodden paths, B2B SaaS, whatever it might be. And we do invest in those companies as well. But for us, the outlier potential in the consumer side is very alluring. And particularly because we spend all day every day in consumer, it feels very sort of addressable for us as well. We've done episodes before on consumer. Everyone has discussed consumer in some way. There's a lot of material out there.

9:21So I think where we should dive really deep is specifically consumer AI, because as I said, there's so many other sources to dive deep on the other stuff. Whereas I think that understanding how AI impacts consumer and whether there's something called consumer AI or it's just consumer and then there's AI underpinning it, I think is a moving target. And there's a lot happening right now. So if we did this episode three months ago, the answers might have been different from what they are today. So if I open with the very open question of what is interesting in consumer AI, where do you then go first?

9:59Well, first, I think we should just say that to your point, there's a lot of interesting stuff in consumer that's not necessarily AI related or at least AI driven. We'll probably talk later on about some of the ways that consumer businesses are using AI to build more quickly and more efficiently. But I think what captivates the imagination on the consumer AI stuff is just the kind of macro why now that it presents to really rethink existing consumer experiences and, in fact, open up entirely new consumer markets. And I guess we always default back to, okay, what are the broken consumer experiences or the problems out there that can now be unlocked by leveraging the new technology?

10:41And so we think about, there's a few, right? So one would be anything where the user experience is super fragmented. So I'm sure you've had the experience of online shopping, for example, or planning a trip. You're across 20 different tabs in Chrome. You're trying to compare across different sources. Lots of wasted time. And the opportunity to deploy AI to front load some of that heavy lifting for you is super compelling. I think the second category would be where things are opaque. And almost the old business models were very much exploitative of search costs. So you think about differential pricing and different channels for the consumer, you could either spend loads and loads of time optimizing that you're getting the absolute best price at the absolute best time.

11:22And again, I think some of those tricks and tactics that are working against the consumer are going to fall away in an environment where we hopefully have AI agents enabling much more always on shopping behavior for us. We also think a lot about areas where true personalization is meaningful and required. So for a long time, we've obviously had personalization as a theme, but often that's meant more sort of segmentation. So we're going to put you, Andreas, into a bucket of people that look a little bit like you. But I think what's different with AI is the ability to truly personalize down to the unit of one.

11:59I actually had this weekend discussion with my wife, who's French, about me getting my French citizenship. we were using chat gpt right to figure out specifically for our uh circumstance how long we've been married where we live all of this sort of stuff what's the best path path for us and that's just a fundamentally better user experience than trying to trawl through 10 different advice blogs and piece together what's the most what's the most interesting or relevant bit for me i think similarly we think a lot about areas where there's kind of lots of disciplines that are playing into an overall answer or an overall product that the consumer wants and we spend a lot of time actually thinking about the opportunity in consumer health when it comes to ai if you think about you know something presenting itself as a as a symptom you're not feeling well for whatever reason there could be lots of different underlying causes for that whether it's your nutrition whether it's your lifestyle whether it's your sleep whether it's some kind of you know biological issue and today the way that you've solved that is going to a GP who you're hoping has the ability to reach into those different pockets of expertise and synthesize something that's most relevant to you it's something that you know the software that can can do that on your behalf and have expert level expertise on all of those different disciplines and then play a role in aggregating it up to you as the as the consumer is incredibly powerful and I guess across the board what the The common thematic that we think is really unlocked is where you have markets that were historically quite constrained on the supply side by high cost human labor.

13:34So you think about things like medicine or law or tax advice, whatever it might be. If you're now creating an environment where through the use of software, you can effectively automate large swathes of that and bring the marginal cost to serve down. that also means you can bring the price point down to a much more compelling level to open up the long tail of markets that have historically been quite constrained in the preserve only of the wealthy so we think the the kind of opportunity to apply ai to fix some of these problems that are still inherent in everyday consumer lives is just it's extremely exciting time to be investing in companies that are doing that it's from an investment standpoint so it's obviously exciting from a consumer standpoint for making the experience better, more personalized, more accessible.

14:23But just as an investor, you're potentially looking at parts of the market which are going to be much, much bigger than they have historically. You think about private wealth management as an example, which historically has only really been accessible by the top echelons of people with all the money because it's a very people-oriented and heavy business that fundamentally takes a clip off someone's assets. And that's very hard for anyone to therefore or for the average person to get access to good advice about how they should think about family planning or their tax, their different parts, their tax returns they might need to think through.

15:05And so just the addressability of the market is immediately expanded when you can reduce the cost to serve because you're using software rather than, you know, big teams of people. So it's really exciting from an investor's standpoint as well to think how big those markets can get. So just to summarize what you're saying is that when you're thinking about consumer and looking at consumer AI, you're very much looking at the consumer journey and you're seeing that we've got fragmentation, opaque markets, complex services, supply constrained services. Those are the places where you're seeing AI really unlocking a lot of potential and a lot of new use cases or company creation that it's very interesting to look at.

15:49I think that's an interesting framework, especially for the journalists out there that are trying to figure out where should I maybe be keeping an eye a bit closer to consumer. These are four interesting areas. Dan, I'd love to ask you, what are the open questions and unknowns when it comes to understanding where consumer eye is moving and where to keep an open eye? Yeah, as you can imagine, we think about this a lot as well and talk about it a lot. I think the first one for us is the kind of adoption, the path to adoption at scale and enduring adoption beyond some of the sort of more experimental use cases that we see people applying it for.

16:28And when we talk about this, we try and segment the world a little bit into assistants and AI agents. And crudely, the kind of assistant side of it is the AI software helping you as the user accomplish a task, which is effectively a supercharged, much richer search experience. and then on the agent side of the spectrum that's the transition towards AIs actually taking actions on behalf of users and acting with some degree of independence and autonomy those two ends of the spectrum like there's quite a lot of distance between them and lots of overlap but we we find it helpful to kind of tease them apart when we're trying to think about what do you have to believe for the adoption to ramp up on each side and I think on assistance like you know we've already seen pretty enormous adoption across whether it's chat gpt or perplexity they're kind of the horse has bolted right i can't remember the latest stats but i think it's 300 400 million active users for chat gpt it's pretty clear that those are those generic models are out there in the wild and being used mostly on the sort of more horizontal level we haven't seen a huge amount yet of scale consumer adoption of some of the more vertical specific tools particularly in a kind of you know as a standalone destination what we are starting to see is particularly in the retail side of what we do at True, a lot of people starting to incorporate chatbot, next generation chatbots or assistants within existing e-commerce platforms.

17:55I think Amazon has one called Reef First. I think Walmart has launched one called Sparky. We're seeing people that are doing it on a kind of B2B basis for smaller merchants. That very much feels like it's happening, but it's not yet driving a standalone destination for the consumer. It's more of an add-on into existing platforms, which we'll come on to and as we said that's kind of like very much you know in some ways is more opinionated and and better evolution of search which is incredible and you know it's a fundamentally different experience but I think one of the questions that we have is because it's effectively a sustaining innovation for a lot of incumbents that own the distribution does that create opportunities for for massive standalone businesses I think there's a there's a question mark there I think on the agent front we're a little bit more like healthily skeptical but optimistic is how i'd describe it because i think whether you look at kind of open ai's operator or manas ai or what microsoft are promising to do with copilot they look absolutely amazing in the demos but at least from what we've seen so far there doesn't seem to be that much at scale application of them in the real world for the actual consumer i mean there's loads of reasons for that both behavioral and technological that will have to get figured out over time before we really see adoption ramping up.

19:13We actually recently wrote a blog post about some of the things that we think need to be unlocked for that to happen. And we listed a few things in there, but I think ultimately it boils down to one around the kind of data and context problem of how much information the AIs need about the specific task and the user to be able to execute those tasks well. I think the classic like you utopian vision of just telling a computer to do your weekly grocery sounds great, but actually there's a lot of complexity in there to get it right. I think the second big barrier that we see is around like more subjective judgment calls for the agents to make.

19:51And again, that's going to be partly solved by the data and the context problem. But for things that are a little bit more subject to opinion, it's going to be tough for a software to reliably make high quality calls on those things relative to something that's very objective. So the kind of, you know, buy me a shirt for a podcast recording I'm doing that's going to make me look intelligent, that's a very subjective task. Whereas you say, you know, buy me another iPhone charger, that's much more objective and easier to trust that an AI is going to execute that well. And I think that last point is probably sort of the macro wrapper of all of this as we think about the kind of the risk equation for the user in terms of using AI to perform a task.

20:34And we've sort of ripped off Scott Galloway's algebra of disincentives to try to define it as kind of effectively the probability of something going wrong times the severity of how bad it is if it goes wrong has to be less than the hassle of the user just doing it themselves. So either it means that the use cases are going to remain constrained to things where the downside risk of getting it wrong for the software is pretty low, or we're going to have to get to a point where the data and the context around the task is sufficient, that there's trust that the AI can execute those things reliably and not effectively annoy the user.

21:12So I think when we think about what do we have to believe for agents to really take off at scale and work, we see things that are maybe more skinny or simpler use cases, at least in the short term, being the things that are likely to sort of catch on sooner. As investors, as venture investors, are we at a place where you're already investing in pure play, a genetic business model, so to say? Or are you still saying it's going to happen? We are investing where there's a use case, but we want to see that the business also functions without this big assumption that we'll get there with a genetic precision.

21:59Maybe just quickly to talk about one in our portfolio that is a good example of that. It's a company called JITI that's using AI to rethink the property search experience. So a right move challenger effectively that's AI native. I think when we think about the underwriting case for something like that, there is a lot of utility that JITI can build in the short term that doesn't rely on this kind of agentic future. And we still believe it can be a big business and disruptive just because it's doing the core task, the core job to be done so much better in our view than the incumbents in the market.

22:33I think the real unlock in the long run is if you can think through more agentic capabilities, the fact that you're having a software-led buy-side agent helping users navigate through the property market, which doesn't actually exist today, really, particularly in the UK. You have buy-side agents in the US, but not in the UK. then to the earlier point we were talking about that enables an entirely new market that hasn't existed before so i think it's as ever with these things it's like it's managing the tension between the optimism on in the long run but also making sure that you've got you've got tangible proof points along the way rather than just trying to crystal ball it from from day one definitely agree i think the short answer to the question is we are investing in things which will fundamentally we hope will be fully agentic in the future.

23:19But I think depending on the product or service, it's very specific, I think. Because, you know, if you think about something like wealth management, we talked about briefly earlier, you know, obviously, convincing someone to automatically just invest in, you know, all the stocks that they think you should put a certain proportion of your money in, it's probably not going to be something that a consumer is happy to do from day one because I think that the consumer needs to build trust with software and AI over time. But I don't think it's black and white in that situation as to whether a product has zero utility if there's no agentic properties to Joe's point, because you can have typically a wealth advisor, as an example, isn't necessarily saying, okay, I'm just going to go and do everything for you.

24:09It's going to say, hey, this is my advice and these are your options. now you tell me what your preference is so you kind of get the final say anyway so i think there's there's a journey that the consumer will need to go on and i think that journey is different depending on the product or service that is being sold in general we do see a world where there's full kind of agentic utility for certain products and services the question is how much time that's going to take and can someone build a product where there's utility in the interim to make sure that you're not fully reliant on that if we uh try and dissect this from the user experience and how the best founders move towards a fully organic world then how do you see founders slowly or rapidly move towards a fully organic business slash model slash product here my point being the moonshot idea is that it'll be fully organic you know you're not there today how do you see founders building their way there today are there some principles that guide them are there some actions that they take some something that you can see the best founders those that are most successful in moving along that path to the moonshot idea becoming a reality working better not necessarily something that we see across the board but i think in general founders need to start building from day one what the kind of end product what the end state of the technology needs to be so i think from a technology perspective you build the infrastructure in a way which can enable that agentic experience because you don't know when that is going to be unlocked like what the timing is going to be but i think that the best founders build in optionality like at the product level so when it actually comes to the ux and the ui and the actual how consumers interact with the product they build themselves optionality to make sure that is flexible but you need to kind of have the competence both in your product and tech teams to navigate the ai landscape because it's moving so quickly and they need to build fast because if those agentic experience you know come much quicker than people might think you kind of need to be ready for that as well.

26:28So I feel like people are building the infrastructure and their preparedness to turn that on if they need to, but making sure they have the flexibility to kind of have that one layer of, you know, we're helping you in this decision rather than making the decisions for you to make sure they're building trust with the consumer. I saw a pretty interesting case study of this because I'm a big superhuman user. I'm so happy about my emailing program. And then I saw the launch with Rahul announcing that now they're going fully agendic almost, like it'll be able to both sort your email, plus it'll be able to send some specific tasks or specific types of emails directly on to other parts of the team.

27:15So he displayed that if you have obviously someone who's applying for a job, he would have an automatic reply going to the applicant. And it will also automatically be forwarded to his head of recruiting. And then they were describing it as this is being rolled out. And he was describing it as I already do it. So the founder led there by saying I have it already. I'm working with it. I don't know if that's true or not. I'd love to hear your take on that. But what was interesting was also they rolled it out. It took three weeks or so before I even started to have the labeling, which is the first step towards having the organic model applied.

27:54So they're announcing the rollout even before the first steps are being taken. And then at least here in Europe. And then what was interesting was this is I think I saw it three weeks ago or so. And then last week, I saw Google announce that now they have an organic mailing system. So I'd love to ask the two of you because all us VCs, people in this ecosystem are very much in our emails all day long. So I think we're pretty aware of what's moving on this side. I think there's probably a couple of points in there. I think one is probably around the velocity of announcements in general and how short the windows are between things that seem first of its kind and fundamentally unique.

28:40And then the sort of copycats two or three weeks later. It's got the same kind of pace and almost overwhelm to it that crypto did, I think, in the late 2010s, where almost every day there was just so much going on. It was impossible to stay on top of it. I think in this scenario, it's even worse because unlike crypto, the use cases for the everyday consumer are so much more obvious. And so if you're a curious person, you're in tech or venture startups or whatever, your proclivity is probably to try them all out. And then you end up signing up to a million different services that you then immediately churn from.

29:15And I think part of that is driven by brands being so important in this chapter of AI and tech and innovation. I think the PR ground game and the ability to make noise with releases is actually part of the long run defensibility if you're building the brand. I think on email specifically, I'd say I'm relatively old school in terms of my own practices. Although I am glad that search has got good enough now that I don't have to be ashamed that I don't file all of my emails and folders. I think it's a good example for me where, you know, if you go back to that kind of algebra, I think the risk of getting that wrong, if it's taking like fully agentic control of your email inbox, for me, is probably pretty high.

29:58We always talk about grappling with the information asymmetry in the venture capital space. And, you know, in some ways that that's where the alpha comes from is having a tight grip on what information gets shared where. So for me, I feel like it's a good example where the downside case probably doesn't warrant the trial for me personally. but the things that are more assistant like in terms of the labeling and the you know the teeing up of here's what i suggest you should do do you want to actually action it i think that's um that could be very very interesting and in some ways i think the role of founders is to push the limits on what consumers think they want because we're notoriously bad at articulating what it is we want until we see it and so i think whether that's raoul at superhuman or whoever it is in the founder side they should be the ones that are almost at the most extreme end of the curve and then let the user behavior and the data show whether they need to sort of push harder on that or roll back to something that's a bit more palatable for a mass market consumer.

30:57I would love an outbox approval for my against AI on email. Just like here, go through them at the end of the day. Approved, approved, approved. Just like when we're approving payments. So incredible. guys i'd love to ask you about defensibility in this space where do you see that defensibility comes from in consumer ai yeah it's a it's a good question again obviously something we think about all the time and we touched upon it there i think actually ironically brand seems to be increasing in terms of importance particularly as you think about the large the large players in the space whether it's the open ais or the anthropic i think a lot of the as you've seen like increasing commoditization on the at the model level and the sort of noise around the deep seek announcement a lot of the conversation at least i've heard seems to reorient to the power of chat gpt as a consumer facing brand and the ability to kind of maintain market leadership because you were the first in the market and you're the most widely adopted and i think in some ways like brand is a we see a lot like brand is a bit of a loss when it comes to building companies because i think for for several years in consumer space the performance marketing the measurability of the performance marketing and the dopamine hit of you know it being very mechanical was quite easy to get comfort with and brand maybe paid a little bit of a backseat role but i think now what's interesting is that the ability to build a brand that people resonate with is kind of coming back to the fore and and it's particularly ironic as as it's such an extremely tech-heavy space.