An interview with Judith Dada: General Partner at Visionaries Club

24:42And we're going to look back at the 90s and, you know, us being kind of probably five-year-old kids and think like how lucky were we to live in a time when reality was reality? And that is the piece that we're losing. And so I think it's going to take humanity and all of us time to work through understanding and appreciating all the things, you know, kind of that were being gifted. and at the same time, you know, criticizing or, you know, challenging the conversation around all the things that we're losing at the same time.

25:10Judith Dada:I want to touch on something that you said there, and I think it kind of ties through to everything that you were saying, but it's the role of like VCs and capital allocators. So you're talking about visionary clubs and your own moral stance and, you know, how the more framework that you're developing by which to assess companies or founders buy. The morality in the markets, I think, is always a really interesting topic. and it's not something that I had particularly expected VCs to have a really strong thesis on, I guess. Like I think, you know, you see a fund or a firm as the primary responsibility is to return the fund and to return the money to the LPs, irrespective of the investments.

25:45Judith Dada:So I'm really interested to hear that you've got this more framework where you're taking a very moral approach to an extent in the way that you look at founders. Do you think that's a role that more VCs should be playing? A hundred percent. So I think on the one hand, I would say it's I wouldn't say that we're, you know, kind of championing this or by any means kind of the first. When I was a general catalyst, they have the responsible innovation framework. I think they've been fairly public about this as well. And this played a huge role in every single investment that GC makes as they really ask these questions, you know, kind of for themselves and, you know, kind of need to get behind.

26:20Underwriting also that perspective next to obviously the, you know, kind of maximizing capital perspective. And at the end of the day, of course, we're VCs and we're here to, you know, kind of maximize return for investors. And that's first and foremost what we're going to do. But it's not like, you know, at the end of the day, there's not always a, you know, kind of a choice of, you know, kind of different opportunities. I mean, we could decide, you know, as an industry to back tobacco or like, you know, some companies had decided to back jewels and whatever all these like e-cigarette companies were called, you know.

26:46But then at some point the industry decided that no, you know, and most VCs actually adhere to, you know, the standard. that we're not going to invest in porn, tobacco and, you know, I don't know, you know, like certain like genetics research areas and so on and so forth. And so I do think this has always, to some extent, been part of the industry. I mean, ESG is not a new word. I know it's not a popular word. I've never liked ESG. I think we went way overboard. You know, I think we kind of, we absolutely, I mean, we, I'm not sure what, you know, kind of what was riding us when people kind of, you know, forcing these like, you know, kind of questionnaires on early stage founders about like the heating bills and like, you know, just like just trapping them in like a bunch of paperwork that was like so bureaucratic and didn't have anything to do again with the moral, with the core moral underwriting that I do think is important.

27:36And so I think as an industry, we're just distracted, to be honest, with a lot of busy work that was the wrong work. And so I think that makes it even more challenging now to kind of rope that back in and say we know that we kind of overcorrected and and and you know partly just went for the wrong thing in kind of that last esg wave but you know with this kind of new technological change none of these kind of underlying issues have gone away and so let's now actually do the and that's why this is a longer process and you know requires a lot of nuance but let's now do the work of actually figuring out how we can combine on the one hand capital maximization but on the other hand also kind of the moral underwriting that is required.

28:15And I do think, you know, I think in the, I think,

28:20I think to some extent the market, you know, the market is always oftentimes a very beautiful force in kind of the way that it, that it self-corrects at some point. And so there's also kind of a hope in me that there's already a fairly, you know, kind of active conversation on X, for example, about, you know, kind of betting markets, you know, and Kalshi and Polly market. And I'm not going to give my personal opinion here, but I do, I love seeing that this conversation is now being had where people are asking, is this really what we want to champion? Is this really the world that we want to live in?

28:55Is this really, you know, the best people in the world are supposed to be working, you know, on finding ways to make everything in life a gamble? Is, you know, have we not learned from the past and from like all the regulation that required people to get away from this addiction, that this is maybe not a direction that we want to go in. And so my hope is that, you know, next to us, doing the hard work of trying to find the light, actually there's a lot of, you know, kind of activity in the market where people are themselves starting to ask these questions and then in some ways, you know, in deciding which company they want to work for, which company they want to invest in, and so on and so forth, you know, kind of deciding where they stand on kind of the moral fault lines here.

29:32Judith Dada:Yeah, and I saw a lot of the same stuff on X. there was a graph talking about exactly what the betting or predictions were on and it was like 95 sports it was just like a a new way of capturing a new audience on like typical sport betting and gambling um which i think is yeah personally i don't definitely don't think that's a good use of what are normally amazing entrepreneurs and founders solving i don't know who could be solving phenomenal problems um i always want to get into ai you've had like really interesting I think maybe two articles in AI now, maybe even more, but more recently you spoke a lot about margins.

30:07Judith Dada:And there's a lot of talk about margins. And, you know, I think Accel did a report where they looked at some of the margins of gen AI companies. And they range from like 8 % to 38%. And there's a bit of influence costs coming down. And the thesis seems to be margins will get better and that the business models will improve and that this will justify the crazy expenditure that we're seeing today. Can you give your view on that? Yeah, I think it's, I mean, I don't know. I wish I could give you my definitive, you know, this is where margins, this is the equilibrium of what margins are going to look like in whatever many years.

30:41But let me give you, you know, kind of two perspectives. I think the one perspective is the one of, you know, margins are at some point going to come up. And there's a couple of assumptions here that are driving this. On the one hand, you just spoke about it, you know, kind of infants costs decreasing. I think that we saw a 300x decrease over the course of 2025, which is absolutely incredible. And so, you know, very clearly, you know, kind of that, you know, decrease of costs is still continuing. I'm pretty sure it's going to continue, you know, in 2026 as well. Obviously, if there's one model that takes a very clear lead, which is not what we're seeing today, maybe, you know, let's see what Gemini has in store.

31:19I think they've been the one who have made the strongest progress over the course of this year. But, you know, the lead that you would need to develop is so strong for one model to really be able to drive pricing power in the market that I don't today, you know, would bet on that happening. I would bet on costs continue to decrease. There's going to be real, you know, kind of competitive pressure between model providers, which is going to be great news for everyone sitting at the application layer. That's the first piece. The second piece is, you know, companies diversifying away from token inference.

31:46So they're actually building features that don't require them to burn tokens. That's something that we're seeing very broadly across application layer companies, you know, kind of for the value driving piece. Oftentimes this is the piece where, you know, there's a paid subscriber tier. You know, yes, there's, you know, kind of token inference and there's actually also good models. But for, you know, maybe the free tier or for a lot of the other things that are driving value, you're actually, you know, kind of moving to either cheaper models and worse models or you're actually just moving to features that don't require you to burn tokens.

32:18that could be collaboration, could be reporting, analytics, and so on and so forth. And so I think there's a couple of mechanisms that companies are using to be able to drive margin up over time. And I think by and large, that thesis is sound. Again, it depends on a lot of these underlying assumptions. And it's actually interesting that AI, which is the key thing that allows companies to compete and to build these great applications that are driving so much value, but then trying to diversify away from the thing that's actually value driving in the first place, which is just fascinating. I think there's actually a third piece, which is companies building their own models.

32:51And, you know, kind of we see that with Cursor, obviously, and, you know, and a lot of companies trying to kind of find their own kind of data flywheel. And so they just become more independent from the underlying model providers in capturing the data that their customers and the product users is generating and just, you know, kind of, again, growing independently from that. So that's the pro piece of, like, margins are going to increase. And I think that on the contrarian side, And I would just, I think with AI, we've seen this amazing democratizing force where what I would describe, how I would describe what I'm seeing is a crowding in of competition, right?

33:30So a category where you before maybe had one company competing, because it's now so much easier to build because you've got all these amazing like vibe coding tools and models that, you know, drive so much value for you. a you know kind of it's easier to per se build a product but also the value that you're driving is so much more tangible you know like the the reason for why so many buyers are so excited to adopt this technology is because it's actually valuable and yes we're early and yes 95 percent MIT study that everyone's citing and yes you know by no means we're like you know there yet in terms of like automating all labor but it's starting to drive real value and so that's exciting that also leads to many more companies deciding to build these products.

34:10And so in a category where maybe, you know, kind of five years ago, 10 years ago, you had like three companies competing, you'll now have 20 companies competing, you have a lot of companies going after the same opportunities. And so I think that just decreases pricing pressure, right? Because everyone's vying for the same buyers, you know, buyers have a window of adoption, right? They have a window of, you know, we're going to, you know, choose whatever, you know, company we use here, We're going to choose whatever company we use here. And so kind of in the fight to win customers, you know, kind of companies are underbidding each other on price.

34:42And this is very much oftentimes what I'm seeing when I'm diligencing companies. I just had an example again earlier today and also yesterday where, you know, kind of there's then the saying, oh, yeah, we have more competition, but we're not actually going after the software market size. We're going after the labor market size, right? That's a lot of the kind of promise is the market's not actually this big. The market's all this much bigger because we're automating and we're tapping into kind of labor as a market. But, you know, again, if there's three other companies that are building a product that is arguably as good as your product, maybe marginally worse, but, you know, kind of playing in the same ballpark.

35:20If they're offering it at a more competitive price point, your product would need to be that much better, you know, for you to, you know, be able to, you know, ask for, you know, a significantly higher premium on it. That that's just not what's happening. And so, you know, to give you an example, I was speaking to a company that was that was replacing outsourcing agencies overseas, you know, kind of India, Nigeria. And, you know, let's say they pay a million bucks per month towards this outsourcing agency. But now you can use their agentic solution. And so, you know, if you save a million bucks, you know, in theory, you should be able to ask for maybe 500K, right?

35:54Because that still leaves the customer with like 500K of, you know, kind of pure margin compared to what they had to pay before. But that's what we're seeing. We're seeing these companies price more around like 100K, which is actually more similar to kind of the previous cost of software that was being used in that segment. And that's not because they're not driving value. It's simply because, well, there's three other companies that are, you know, kind of willing to offer it at that price. And so you're not actually, and this is, as always, there's like many exceptions that, you know, kind of prove the rule.

36:22But by and large, that's kind of more of what I'm seeing is there is immense pricing pressure. And so kind of there's these two perspectives on AI margins. There's a perspective of like they're definitely going to come up because of price inference, cost reduction and, you know, diversification worry from tokens. But also the competition and the pressure is real. and so there's not a lot of wiggle room for companies to be able to you know kind of set the price at the levels at which they'd like to and that's really interesting because i think it's

36:50Judith Dada:almost similar to what we saw in 2021 all these like quick commerce companies and you're able to like get your delivery like your groceries for like 15 pounds delivered but it would have cost you like 40 pounds because everybody was desperate for like customer acquisition and it feels like maybe this is like a function of like vc money you know there's like so much vc money going to AI companies that there are so many more AI companies springing up and they're all chasing hyper growth, which means they can bring their prices down. Do you think that's a function and will that change? So if we see, you know, people talk about whether or not we're in a bubble or whatever, but like if we see some sort of market correction, will that then reduce VC investment?

37:28Judith Dada:And will that give startups the ability to actually push up their price because maybe there's less cash funding less of their competitors? I think it's a really interesting question and i mean it's it's an age-old question in vc i remember with you know uber and lyft back in the day and uber was obviously using vc dollars to subsidize the grotesquely cheap rides that we were all catching on the app um and everyone for the longest period of time saying you know this is never going to work and you know uber is just the company is going to die and come down crashing burning and turns out you know kind of probably 10 years later you know uber is doing really really well um you know and lyft actually didn't didn't quite make it at least not to the same extent and so you know that kind of using vc dollars to subsidize customer acquisition costs and cement you know kind of a dominant position in the market um that worked for uber but now uber had network effects right um they had network effects on the on the kind of rider side and on the you know kind of passenger side i think many companies don't quite have that and so i think i think it's a more fair question to ask whether, you know, kind of using VC dollars to subsidize, you know, kind of the marketing and branding and customer go to market position in the market is going to be as, you know, kind of profitable or as much of a winning recipe as it was in the kind of last innovation cycle that we saw.

38:48We certainly see some companies, you know, kind of at negative gross margins and, you know, definitely, definitely following that playbook. We also see other companies, and this is also something that we should say right back to the thing about kind of capitalism and you know kind of the new dna of a company being very lean you know there's often a critic like criticism about gross margins but like these are companies that are achieving whatever top line they're achieving with like much much much smaller head counts right so the the whole you know kind of the whole um kind of fingerprint um of the company is just much much much smaller um and so you don't actually need the same gross margin to be able to still be a really interesting company um yeah so it's it's again i think it's right now it's a it's a murky picture every now and then you know i i feel like i'm erring more in one camp or i'm erring the other camp and then like three months later you know everything's changed i always jokingly say no one knows anything when it comes to ai and everyone who pretends you know it's just it's just fooling themselves um i think we're going to be all that much wiser at the end of 2026 and probably we'll still be in territory where we feel like we don't know anything um but yeah i i think it's i think that's going to be an an ongoing question yeah i think the one of the most interesting

39:55Judith Dada:metrics of the moment is really like uh gross margin per fte and that's like the under the underutilized metric i'm always people are always willing to share revenue metrics to an extent if they're good retention metrics people are sort of chasing arr per fte and like 1 million arr per fte is like a really gold standard but i'm always like tell me your gross margin per fte because that's like that's really where there's like a solid solid unit economics as we see these numbers change hyper growth, AOR, being used, gross margins come down. How is that changing the way that you're assessing companies as a VC?

40:29Judith Dada:Are you having to use a new framework to assess potential? So first and foremost, we look at talent. That is the number one thing that we care about. And that hasn't changed whatsoever. You know, I think if anything, it's become more important. and the picture that we discussed internally was one of a dragon slayer, right? Like I think really if you look at AI, I mean, there's many kind of analogies that have been drawn, like it's building on top of lava because like the landscape's changing all the time and like all the agility and the resilience and the drive and the hustle that founders need.

41:04But I'm kind of, I'm just picturing AI as this like dragon and again, like positive and negative because in many ways, you know, kind of you can get absolutely, you know kind of um um you know kind of just as what is it eviscerated eviscerated by the and anyways i think it's eviscerated by the dragon but you can also at the same time if you like you know kind of the strongest person possible just jump on its back and kind of harness its powers and like ride into the storm or whatever and so that's kind of the mental image when i'm not diligently found as i'm asking with them are they you know kind of a dragon slayer or kind of a dragon rider um uh and so you know i think that's like first and foremost what we're looking at and then but to your point around you know kind of more the metrical side of things like of course you know we especially when it comes more to kind of venture stage or growth stage investing we look at benchmarks and those benchmarks have just like moved up and up and up in terms of what like excellence looks like and it's actually pretty daunting you know to see that a company that reaches a million in arr of a kind of a set period of time it's like that you know does not really, you know, kind of get our lot rolling in the same way as it did before, which is sad in many ways, but exciting because it just means like the market has changed so much.

42:21And so, yeah, we're definitely seeing kind of every benchmark has been moved up. I mean, you know, A6 and Z, I think, published these numbers around like consumer gold standard, enterprise gold standard. And so it's a much more competitive game at the venture and growth stage. and at the early stage it's it's always been but now more than ever it's about talent and

42:42Judith Dada:talent being dragon riders and you know i guess going into vc a bit more broadly like one of the things that you wrote was about status you said i think ai changes the rules of social status and it's much more about scarcity and branding and i think access you said from an outsider looking in like vc looks like a very status-driven game it's all about the deals that you've won or the brand the branding of the firm that you work for has this changed even more so in an age of ai i don't really think so to be honest i think that so status is interesting and i have for anyone interested i can really recommend naval robert cunt's writing on status i find it fascinating but at the end of the day like status is a zero-sum game because status is your position in the social hierarchy and for me to be in number one like someone else needs to be number two and if I move to number three and someone else is going to move to number one.

43:35So it's kind of zero sum. And status accrues to the things that are rare, right? It doesn't accrue to the things that are abundant. And so what is status driving? It's like intelligence, it's wealth, it's beauty. Those are all defined by their scarcity, not by their abundance. And so, you know, as you said, kind of, you know, AI, kind of VC is very much, you know, kind of, I think in many ways, a very, you know, kind of status driven industry where, you know, working in VC has a certain status. you know, and kind of then backing the best founders, you know, also has a certain status. I don't think, you know, at least not today, you know, AI is hugely changing that game.

44:11I think, however, you know, down the line, and this is not just the case we see, I think this case for many, many different markets, you know, if we were to get to a point where AI could perfectly do the work that we're doing in terms of like assessing founders in terms of, you know, kind of especially probably the more latest stage you go, the more data you're being able to pick up on companies. You know, if we get to a point where an AI model could, you know, decide on what is a good investment much more effectively than a human in VC, I think that's going to have implications for, you know, kind of the status that is going to be associated with that, because then either, you know, that's an AI model that's accessible to everyone.

44:47So suddenly something that is scarce is no longer scarce. And so kind of, you know, that's going to change the way that, you know, going to status accrues in this industry. I don't think we're there yet. I know there's a couple of funds who are already early champions of this work and I think that's exciting and you know I'm really interested to see what those what those vintages and returns are going to look like because I do think you know down the line at least on the more later stage side AI will of course play a really interesting role like today when you ask VCs you know is AI going to come for your job and they're all like no no what I do is so unique and like it's so relationship driven and so on and so forth and I'm like you know I'm sure that's what everyone else in every other industry also tells themselves.

45:24And so I think, you know, we're no exception here, by and large, which is why it's super important that VCs also, you know, kind of do AI adoption, like we really, you know, and that's what we're trying to do at Visionaries, we really try to, you know, kind of challenge our own workflows, the way that we, you know, kind of automate our work, you know, kind of everything that we can do to just gain more efficiency, and be able to use even more time doing the things that AI is not able to do, which is just forming relationships with founders, you know, being kind of a trusted partner, being someone that they know has their back and is able to you know kind of um drive the company alongside them over many many years um uh yeah so i think there's there's there's a lot of things that ai is going to change but i don't think a vc status is something that will be upended just yet

46:08Judith Dada:interesting well i'm conscious of running out of time i want to get on to the quick five questions if that's all right um what should what is like one book newsletter podcast that you think you you know, either every founder should be reading or listening to or every VC should be reading or listening to as they like look forward into 2026? Yeah, so I'm a religious listener of No Pires by Sarah Gouro and Elad Gill. I think especially if you're into AI, they always have like really interesting guests. It's like not too technical, but, you know, kind of still technical enough for that side of your, you know, kind of brain to also get, you know, a little scratch.

46:45I think it's really, really fantastic. I can't believe they're doing that next to like all the other things so during I have so much respect for that but that would be my number one recommendation.

46:55Judith Dada:Love it and then two about your own personal portfolio highs and lows so number one what is the biggest miss that you've ever had and maybe it was a deal that you didn't quite win or it was yeah something that kind of like slipped through that you kind of keeps you up at night. Yeah this is an easy one it's Trade Republic I mean what a fantastic company and what a fantastic team I actually studied with one of the founders Thomas together at university um and I heard about you know kind of this 15 million series a that they were raising and I knew that the wait list was exploding but we thought it was too big around for our fund at that time this was still half million days um and it was consumer you know fintech which was not really something that we were doing um but it looked super interesting we had like a you know kind of 40 minute conversation about how interesting it is um but like that is really not something that we would do um anyways that turned out to be a huge mistake yes okay and then on the flip side what's like the the deal that you're most proud of maybe it's because it's the biggest success or maybe it's because it's like a i don't know something that you had to work really hard to win or you played a big role in helping the founder something that like you look back on with with like yeah real pride i really like i there's so many deals that i um invested in that i absolutely love um so i don't i really don't have like a single favorite one i will say there was a situation with a founder where things were not quite working out the way that they had intended and it was a company that raised a bigger seed and we had led the seed but there was also already you pre-seed and so it was three uh very notable uh well-known investors on the board of that company um and um i really raised the founder highly but i think again things weren't working and so i think i was the the one person who you know was speaking truth to power kind of just saying i don't think this is working and i think you need to assess your options where i think one other party was just quite silent and the other party was just they're very different and you know i think at times maybe more destructive opinions and that founder ended up selling the company successfully um and then i think like a year later or something called me um and just thanked me for you know the role that i played at that moment in time and this was not a huge exit like this was not a you know this was maybe like the 2x or something that we made on this but it was it was meaningful for the founders um and he just said you know you have been you know you you said the right things and you um put your finger wet hurt but you did it in a very very respectful way um And I just want to thank you because I looked back on the year and you were one of the people, if not the person that's had the biggest impact on me.

49:31And that was just like that was so wow. Like that was such a wow moment because like so many days in this game, so many times in this game, you feel like, you know, to some extent we are a commodity as VCs. I know we don't like to say this. And, you know, I do every day. We work really, really hard to be, you know, kind of to deserve the place on the cap table of founders. but at the end of the day there's many great VCs that founders can choose from and so just hearing founders say that you know among the many great VCs that you were working with you were the one who had you know kind of an outsized impact on them that's at the end of the day why I do this job next to all of the great you know kind of returns that were driving and so on and so forth but that's the one that stood out yeah that's an amazing story thank you for

50:11Judith Dada:sharing number one advice you would give to somebody who's maybe you know young in their when he's wanting to break into VC? So I think at the end of the day, this is a time where things are as up in the air as they've ever been. You know, I think the democratizing force that I was describing earlier that, you know, founders are benefiting from, but also struggling with, because it means there's so much competition. I think that goes for each and everyone. I think it's no coincidence that the people who seem to be most impacted positively by AI are either like senior software developers who are able to now, you know, just 100x their productivity or very junior software developers, you know, who are just able to do so much more, you know, kind of in the face of this technology.

50:55And so I think if you're a young person, there's AI. This is a very unique moment in time. This is, you know, kind of squarely, you know, kind of the eye of the storm, you know, of venture capital. There's like a thousand ways in which you could be, you know, using tools like Lovable, like there's so many things, creative things that you could be doing you know to add value to founders to add value to vcs like get creative you know use the toolbox um but i would say like just make it practical i think the the times of like i'm sorry cvs is over like i don't really care about reading a cv anymore to say you know it's like what exactly have you've done how out of the box have you been you know what are the like 10 ways in which you've helped a founder like what are the 10 ways in which you helped me see the world through a different lens and get creative it's never been easier more exciting than it is right now and i think you're going to have a pretty pretty

51:43Judith Dada:um great time in this ecosystem nice love it and then if you were given five million euros to start a company what company or what kind of industry would you be building in i thought about this question and honestly i mean so i think so if i was a if i was someone with like very very strong vertical experience i would definitely be building like a vertical application layer company i think that's like it's if there's ever been a calling if you're someone who's been like 10 years in this industry and you've always wanted to fix this problem but you've never seen how like just do it now like stop whatever you're doing and go build that now now the last 10 years I've happened to spend in this industry and so I can't quite give that I can't give quite give that answer um I I think I would say you know something um around and this is also something that we're doing at at visionaries but it's likely you know kind of more the um the narrative and this like you know driving the bus like it would likely if i'm really honest be something more around you know policy and change making as i just do think we need more urgency behind a lot of the problems in europe and we need more young people to not feel like that's someone else's job over there but it's like all of our jobs so it likely you know down the line be um you know some type of think tank or you know kind of organization that's able to you know um influence i don't know the next election to help stop germany from driving off a cliff i think that would be a good starting point and you know looking at the uk i think you guys need some help over there as well so it would likely be more kind of in the societal change making area um for me personally um than anything else no i love it and one of the reasons why i built scaling europe is i would love to use media as a as a platform to influence policy that's the direction i want to take in it is if you can build a pan-european media company with lots of people engaged it becomes a really powerful tool to influence policy so i love to hear it and then final question if instead you were given that 5 million euros to invest in one private company what would it be and why easy anthropic i mean how amazing is that company um i think that i mean it's not just what they're doing on the model front i think the work they're driving in terms of safety research in terms of economic research i think the voice that they have in the ecosystem the whole branding you know keep thinking i think we just need more of that you know i think we need less by signaling companies we need more anthropics of the world so this is a super easy one Dario like please take my five million you know I'd be happy to give them to you any day I love it well look Julia thank you so much for joining me I've absolutely loved chatting it's been great 100 % this was this was great um this is uh the time you know just flew by it's crazy um I loved it good well look thank you very much

54:30P ll o t o r f r o r off