17x Midas List VC Navin Chaddha on The 100x AI Opportunity

0:00You've been honored to be on the Midas list, not once, not twice, not three times, but 17 times. AI to me is democratization of intelligence. According to NVCA, 67 % of all dollars went into AI companies. So my advice to entrepreneurs is, you better adopt this technology and do something with it. When there are billion-dollar seed rounds, my head spins, and I can't make head or tail sense of it. Companies come and they say, oh, I'm depressed. I said, what happened? Oh, my valuation is only$300 million at the seed. And I go there. The spend on knowledge workers globally is 30 trillion. And AI will do 10 to 20 % of that.

0:39It's a$3 to$6 trillion opportunity over the next five to seven years. The companies won't go zero to 100 in the first year. If they go one to 10, they're doing pretty well. If you only go one to three, maybe you're like medium, average. For the first time in our lives, machines understand our language. So we don't need to learn program. Are you vibe coding? I am, actually. In a few ways, to me, knowledge, expertise is going to get democratized. So my advice to every human, including myself, is consume this thing before it consumes you.

1:21Laveen, welcome to Sorcery. Thank you for having me. Thank you for having me. It's great. We've been talking for a while. I'm glad we're doing this together. I know. This is so fun. And this is on the day of the divot list. That's true. The Mayfield Divot List. Yeah, Divot List. Yeah, yeah, yeah. We have a lot to cover today. But to start, we have to address something. Let's do that. You have been involved in some of the most, if not all of the most, consequential shifts in technology. and you've been honored to be on the Midas list, not once, not twice, not three times, but 17 times. Yeah, just been lucky working with amazing people.

2:05What does it take to build a winning company? I think it may feel, and my perspective always is, it always starts and ends with people. So we try to bet on the right people who are visionaries, very mission oriented, can go through any wall, are team players and have high EQ. A lot of people have IQ, but they really have high EQ and are secure in their skin and will want to win the right way along with their team at any cost. So it's always about the people. Starts there, ends there. So as long as you pick the right people, it doesn't matter what their initial starting point is. They'll go win at the end.

2:50And I'm an optimist. Great people, great things happen. And what does that mean for the AI industry today, for early stage companies? Yeah, I think it still remains the same, right? Old is gold. At the end, venture, entrepreneurship is an apprenticeship-based business. and in the AI era, overall, it's a 100x opportunity. I've been lucky to be involved in the web era, the mobile, the cloud, the social, the not so good eras. And then the AI, I think those eras were a 10x opportunity. This is a 100x opportunity. So the kind of success that'll get created won't be just$10 billion companies. There'll be many$100 billion companies But again, what will matter the most is the people who are creating these companies.

3:44That's not going to change, at least for Mayfield and me, at the stage we invest, which is inception and ideation stage primarily. What makes this a hundred times opportunity? Yeah. So what I would say is if I look at the PC era, it was creating an environment where it was a 10x disruption where you brought computing to every desktop. You move it to the web. Now we could consume information. You move to the cloud. It was a back end innovation. mobile, a front-end innovation. With AI, the reason it is 100x, there are two things which are happening. First, the interface in the way we interact with machines is becoming conversation.

4:35For the first time in our lives, not only mine, but everybody's, including my parents, machines understand our language. So we don't need to learn programming. So it's an expansion, which is we can talk to machines and ask them to do things in our natural language. The second thing is with the cost of compute and the innovation in AI technology, GPUs, machines can now think, they can reason, they can plan, but what's different is they can take action. And that's another 10x force. So if you combine the disruption on the front end where machines understand human language and you multiply that with what's possible on the back end with intelligence getting democratized, it's 100x force.

5:29And as an example, there are 30 million developers in the world today who know how to program. Using AI, I think everybody, 8 billion people in the world will be programmers because they'll wipe code. That's why this is a 100x opportunity. It's really 100x because 100x times 30 million is 3 billion. So there will be 3 billion creators in this world. And it's a very exciting time, right? Very, very exciting time. Are you vibe coding? I am actually not in a few ways. One, trying to use vibe code with prompts, my daily work. And second, in the free time, if you're a VC, you have to eat your own dog food.

6:14So I'm creating fun apps, fun websites. And I started as a developer back in the mid-90s where I created my first company. So it's good. Now I had forgotten everything. Now I can remember everything. You have to, right? Like you have to eat your own dog food to understand what's happening. And it's fun. It's fun. It's called a vibe for a reason. Yeah, we're in the vibe era. Like I called it the vibe economy. Not only will be vibe coding, it will be vibe ops. It's really the vibe era. It's not the AI era. It's the vibe era. Rebrand. Rebrand. That's what VCs and marketeers do well. Some people call it also the AI super cycle.

6:58Where do you think we are in the evolution of this super cycle? Yeah, I would say we're still early on in the super cycle. but the valuations are really high in some of the spaces. And this is the standard hype curve. When new waves come, expectations are ahead of reality. But if I go out four, five, 10 years out, it'll be a reality. The same thing happened with the internet where things just astronomically were overvalued in three, four years. But the difference today is the reason it's going to be 100x bigger, because when the internet happened, people didn't have connectivity. Today, 7 billion, 8 billion people are on the internet using mobile or their PCs.

7:51So you can have things grow to 100 million monthly active users in one month, in two months, in three months. It took 10 years for Amazon to get to that point. Versus when TikTok happened, people were talking about, hey, nine months, six months to get that. Now people talk about like a week to get there. So I think the reality is it's early days, but some of the things have already taken off, whether it was with chat GPT, but let's look at Vibe coding. Companies are doing 100 million in revenue, 200 million in revenues, they're going to be doing 10 billion in revenues. We'll blink and that's what they will be.

8:35But on the other side, if I look at enterprises, still early, a lot of hype, but very few enterprises can actually do anything with this technology and there are all kinds of reports. Some reports say it's working. Every enterprise, 60 % of the enterprises are using this tech. And then the MIT report comes and say 95 % of it fails. So you just don't know. There's like camps. There's the left wing. There's the right wing. We have to, but I think I'm centered in the middle. And I believe this is marathon. Company building, deployment and adoption of technology. We are maybe in round one right now.

9:21The best is yet to come. Besides valuations. Besides valuations? They're overhyped in some of the spaces. But hey, it's part of life. At what point is it concerning to you? It's concerning even today. Because I believe companies should be built with the right fundamentals and valuations should increase as they make progress. When there are billion-dollar seed rounds, my head spins and it's still spinning. I can't make head or tail sense of it, right? How many billion-dollar companies are there that have gone public in the last 10 years? Not that many. People are doing seed rounds. Now they tell me, companies come and they say, oh, I'm depressed.

10:03I said, what happened? Oh, my valuation is only 300 million at the seed. And I go like, I think it's like problem of riches. That's what these entrepreneurs have. So I think like it's already high. I'm concerned. I'm concerned that everything may not stay up. So we could go from all these hyped up companies. Some will keep growing, but maybe that will be 1%, 2%, 3 % of the hyped companies. But a lot of them are making their lives really, really hard. How do you and the team at Mayfield value companies? What's the strategy there? I would say at Mayfield, since we are investing at the ideation stage, we are looking for a win-win.

10:52with the entrepreneur. Clearly, from where we were investing in the cloud era or the mobile era, valuations are dramatically up. But for us, a win-win with an entrepreneur is, hey, everybody needs to make money. We respect their business model. They need to respect our business model, which is VCs need to have margin in their business. So we need to have, with small checks, enough ownership for the risk we are taking. And luckily, to succeed, there are enough entrepreneurs who believe in that philosophy that we can still survive and thrive. So that's what we are trying to do. There's no science.

11:30It's really an art. You can't be on every cap table. We can't invest in every company. Every founder may not work with us, but can we find seven to eight inception stage companies a year where we have meaningful positions and we can work with these entrepreneurs to help create leaders of tomorrow? There are. So we try to stay away from people who have unrealistic expectations. And why? Why get into business with people? And it's vice versa. My standard answer to people is if they ask for something, sorry, we don't have such a product. Right? Like, I love In-N-Out, but I have their veggie burger.

12:14Now people will say In-N-Out only sells one kind of burger. So what is this veggie burger? you throw the beef patty away, and you have the rest of the stuff, right? So if you go to In-N-Out and say, I need a chicken burger, they don't have it. You come to Mayfield and say, at seed stage, I'm raising a billion dollars. Sorry, we don't serve that. So one needs to know, even as a venture capital firm, what's their North Star, what is their strategy, and stick to it. So that's what we try to do. And be happy with what you're doing. Sorcery is brought to you by Brex, the financial stack trusted by more than 30 ,000 companies, including one in three venture-backed startups in the U.S.

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13:38Start today at brex.com slash sorcery. That's B-R-E-X dot com slash sorcery. So Carta has some data on this. AI native companies have a much faster and easier time raising capital than non-AI companies. So much so that Series A, they now raise 2.5 % faster. This has increased. And then also AI companies are getting a premium. So this valuation pump is really happening and it's affecting seed to Series A, most significantly at the Series A. Companies in the first half of 2025 saw a 30.9 % higher valuation and secured 33 % more capital than any other companies. How do you think about that in the grand scheme of marketing?

14:35I think it's just the reality. If you are not going to be an AI native company, like where do you go? It's like saying, I'm not a tech company. Every company in the world has to use tech. So AI to me is the great equalizer. It's democratization of intelligence. So that's what consumers want. That's what businesses want. I would say go even further in the first half, according to NVCA, 67 % of all dollars went into AI companies. I think it's going to be 90 % in a year. And it's going to be really hard for companies. It won't be just 33%. Companies are going to take 10x the time to raise money if they are not an AI native company.

15:22So my advice to entrepreneurs is, figure out how, like the way people build on clouds, how companies were mobile first, how do you use this technology and endorse it? You don't need to be a foundational model company. That exists. You don't need to be an NVIDIA. But if your customers are looking for intelligent applications, they want to drink and have this pill, which is called intelligence on demand, You need to integrate it in your products. It's not about cost cutting that the big companies are figuring out. How do I use AI to improve productivity? You're a startup. You're supposed to be 10x ahead of where the incumbent and legacy vendors are.

16:10So you better adopt this technology and do something with it. So I think it's only going to get worse for non-AI companies. If everybody's an AI company, then where's the value? I think the value. How do you find the fake companies? There's going to be a lot of them, right? So I think to me, AI is just going to be an ingredient technology. It's going to be, I build a product. It's like saying, hey, I use electricity. But now the thing is, we consume electricity. Every company consume electricity. What do you do with it? So now using AI as a commodity, as a utility, you have to go solve real problem for your end users, which can be consumers or they can be businesses.

17:00So you have to figure out what do your customers care about and provide them painkillers, not vitamins. If you do that and you can rise above the noise, they will buy your product. And if they buy your product, either they'll pay or some advertiser for those eyeballs will pay money to you. So I think to me, that's where the world will head once this infrastructure, what I call the cognitive plumbing layers of the hardware and the models settle. applied AI companies are going to be on the rise. So that's what I mean, that you have to just take it as a given that your product needs to have AI as an ingredient in it and then build on top of it.

17:51So let's talk about the full stack of technology. You invest end-to-end semiconductors to applications and software. Could you lay out all of those layers and how do they work together? Absolutely. So first and foremost, I would say, as I mentioned earlier, this is the intelligence era. So our belief is humans and AI will work together and take us into this new era of collaborative intelligence. And in this era, AI will enable humans to get to superhumans level. And what I mean by that is if AI can help augment me and free up time so that I can go do things which I really want to do, so they can amplify my capability, AI can amplify my capabilities, Give me time to do creative things or do things I could never do.

18:50So to enable that, we believe there's a collaborative intelligence stack which is being created, which starts from the hardware layer, which is the semiconductors. The next layer up is the brain, which is the model companies. Once you have models and you have hardware, this gets packaged by a cloud service provider or by an inference company. You need to bring your own data. So the data layer becomes important. Once you have data on top of models, on top of hardware, now you need middleware and tooling to do something with this plumbing layer. Once you have that, you build intelligent applications.

19:35And then finally, the most exciting layer of this stack is what we call AI teammates, which are built on agentic technologies. And what are they? They're digital companions that work with humans to take us to superhumans level. And that market is a massive market because the spend on knowledge workers globally is 30 trillion. and AI will do 10 to 20 % of the work of what humans do to offload them. That's a three to$6 trillion opportunity over the next five to seven years. And that's what we are seeing with Vibe coding agents, with AI enabled customers, support reps that, hey, AI will be your digital companion.

20:23So this market is just expanding the same way Airbnb, Uber, Lyft, DoorDash expanded markets. That's what AI is doing at this AI teammates layer and their opportunities up and down the stack in this era. And that's where you think the most value will accrue? I think right now the value is at the infrastructure layers. So the hardware companies are, and systems companies are the most valuable. So if you look at NVIDIA for four and a half trillion dollars. Then you have a company which most people don't know about called Broadcom, which makes all the networking chip and other chips along with AMD.

21:09It's a$1.6 trillion company. Then you look at systems companies, Apple, hardware company. You look at cloud providers, Google, Microsoft, AWS, they're all two, three, four trillion dollar companies. And then there is Meta, which is a consumer company, but most of the value right now is in hardware and systems companies or cloud providers. Next layer up, models, is where the value is accreting. You have a$500 billion company in OpenAI. You have a$170 billion company in Anthropic and many$10 billion companies. So that's where the value today is. but looking forward, the value will move up. It always happens.

21:57The roads are built first, the infrastructure, the plumbing layers, but then cars come. That's where these teammates and intelligent apps will be. So today, for the next five years, that's where the spend will be. People are just building roads. Once the roads are built, you have to do something with it. So that's where these AI teammates and intelligent app companies are going to get created. And that's how you're going to consume all this infrastructure, which is getting built, right? So the equivalent of chat GPT or the equivalent of cursor is going to be created for every consumer intent and every business user.

22:38So we're just at the start of that. Just at the start. But today, value for the next three, four years is at the infrastructure layer. If I take 10 years out, this will be built. Value will go up the stack. How are business models different in this era versus the SaaS era? So I would say at the applications and at the teammates layer, SaaS took us from the era of perpetual license, which was enterprise software, to subscription, where you charge per user per month. now we are moving into an era of consumption-based pricing or outcome-based pricing. I don't pay you per month. I pay you for what I use.

23:27And that's where this era is going, where I don't charge per user per month. I charge for the activity I do for you. I charge for the task I complete for you. So that's where the business model is changing. and that's a very important component of these AI native companies. They have to move from subscription to consumption-based pricing models. In today's high-speed business world, staying ahead means using the smartest tools possible, including the powerful capabilities of artificial intelligence. Meet Turing Intelligence. Turing builds customizable AI systems designed to solve your mission-critical challenges no matter your industry.

24:07From expert guidance to tailored projects, Turing helps top companies realize AI that's more capable, more adaptable, and more effective. With Turing, discover how AI can accelerate your business growth. To learn more, visit Turing.com slash sorcery. Spelt S-O-U-R-C-E-R-Y. That's Turing.com slash sorcery. The race to 100 million. I was going to say billion because we're just throwing out big numbers. It could be a trillion. It could be a trillion. But the race to$100 million in revenue has become a new benchmark. Somehow, someway, it's how fast can we get to$100 million in revenue? I think one thing that could be interesting to break this down is the different types of companies that are reaching the$100 million in revenue because they're very specific.

24:53Yes. Could you explain the different types of companies that are doing that? It's like AI research labs, but then it's also lovable. So, like, what is the difference there? So I think there are actually, let's decipher it based on the stack. So there are companies in the hardware layer, which are going zero to billion, not even hundred. And I have a few in my portfolio. Okay. Which hasn't even announced they exist. So I have a company which is in the optical interconnect space. If you have GPUs, you need to connect them, not on copper, but on optics. this company went, remains in stealth. It's 14 months old from zero to$3 billion because the spend is massive, massive, right?

25:42And they only have a small portion of the market. Their competitors in China, just the top two players are worth, one is worth 70 billion, the other is worth 50 billion. And when they get this contract, maybe they have 10 % of the order, 5 % of the order. So hardware companies, what we are seeing with NVIDIA, if you hit a jackpot, don't compete with NVIDIA. But everything around it, power, cooling, networking, you can ramp even faster because the orders are big. The hyperscaler are your customers. The second area is the AI research labs, which have also scaled, not to 100, billions of dollars in revenue.

26:24I think the third area where the revenue ramp is happening is coding agents, which is cursor and lovable. I can tell you everything else is slow, which is to get to zero to a hundred, it ain't happening in one year. So it's hardware, models, and these coding ones are the killer apps. The rest of the stuff goes, and these are like, I don't know what the word for these are. Like these are like imaginary creatures. They never existed. it. They're not unicorns. You and I have to come up today with a new name. I don't know what it is, but we'll figure it out or we'll figure it out in the comments, right?

27:01Like, but the remaining companies are, I would say, going from one to 10. In the past SaaS companies, if you did one to three million, you used to feel good. That's it. Now people say that's it. So I think teammate companies and application companies will go like one to 10, not one to 100. But there could be categories, the equivalent of cursor and lovable, which have a product let go strategy, more a bottoms up strategy. Maybe it will happen in IT ops. Maybe it's happening in legal where it's like chat GPT or lovable individuals can use it. The moment you go top down and there is a human involved on the other side who has to write the check.

28:00You know what happens, right? Like basically it's slow. So that's why it's not that the market isn't there. The bottleneck will be humans. When you go to an enterprise company and say, buy my product, the security person raises their hand. this is wrong with this thing. Governance people wake up. Privacy people wake up. Then procurement people wake up. So there you can't ramp. So it's these bottom-up companies at the app layer which can ramp. So could there be more? Could there be a team made for accountants where accountants individually buy? A team made for tax preparers? A team made for salespeople?

28:40So if you can have a bottoms-up motion, then you can go 1 to 100. But if you have to go sell to a buyer there's friction, there's paperwork to sign documents. Even though they're in the cloud DocuSign but still humans are signed. So the companies won't go 0 to 100 in the first year if they go 1 to 10 they're doing pretty well. If you only go 1 to 3

29:09maybe you're like median average 1, 2, 3 used to be right in the metrics you're a great company 1, 3, 10 I think now it's 1, 10, 50 for even the normal companies the equivalent of SaaS that's expected of you but if you hit a category like lovable or like cursor yeah 1, 200 is expected of you and if you're a hardware company you have to think in 2, 3 years in billions and I think probably most of the people haven't figured that out. That's what is happening in hardware companies. They're ramping even faster than lovables and cursors. Sorcery is proudly sponsored by Carta. Carta is transforming the private marketplace, connecting founders, investors, and limited partners through software purpose-built for private capital.

29:58Trusted by more than 65 ,000 companies in over 160 countries, Carta's platform of software and services lays the groundwork so you can build, invest, and scale with confidence. Carta's fund administration platform supports over 9 ,000 funds and SPVs, representing nearly$185 billion in assets under management, with tools designed to enhance the strategic impact of fund CFOs. For more information, visit carta.com slash sorcery. That's C-A-R-T-A dot com slash S-O-U-R-C-E-R-Y. So Hamant just went viral on X with his interview with Harry Stebbings of 20VC because he thinks that the triple triple double is over.