Microsoft Lowers AI Sales Growth Targets, AI’s Impact on Venture Capital & Travel | Dec 3, 2025

0:13Welcome, everyone, to the Informations TI TV. My name is Akash Basritcha. It is Wednesday, December 3rd. We have got a great show lined up for you today. First up, our Microsoft reporter joins the show to talk about the changing sales strategies that he's found at the company as AI products struggle to attract customers. We'll then dive deep into our weekly finance column, which looks at how credit agencies are acting as a reality check in the middle of the AI euphoria. We've also got a pulse check for you on the VC world and how investors are thinking about AI and tech investing. And we will wrap up the show with a look at the online travel sector and bring on a European founder to talk a little bit about what it's like to operate a tech company in that region in 2025.

0:59It is a big show. So let's get right on into things. Microsoft is making changes to its sales strategy as it tries to deal with challenges that it's facing to sell agents to customers. That is according to a new report from The Information. And I want to bring on Aaron Holmes, our Microsoft reporter who wrote that story to talk all about it. Hey, Aaron, how's it going? Good morning. Morning. Thank you for having me. So let's talk about the story you wrote. How is it that Microsoft is changing its sales strategies as it tries to get more agents in the hands of its customers? Yeah, so essentially what I learned from sources is that Microsoft has lowered some of the growth targets for specifically AI agent software that its Azure salespeople are selling to enterprises.

1:44And that means that they still do want to sell more year over year than they did last year, but the percentage growth targets have come down slightly. And I heard that that happened after several different Azure units in different geographies in the U.S. had trouble meeting the goals that were set last year, which could mean that the goals were simply too ambitious or that customer demand for these products wasn't quite as high as Microsoft was expecting. Okay, so if they're lowering the sales quotas on the ground, then conceivably doesn't that mean that overall revenue would also slow in terms of growth?

2:20Yeah, it's a good question. So this means that specifically their growth targets, so the percent that they want these product sales to grow, has moderated from last year, which means they still plan to sell more year over year, but just not at quite as steep of a rate as they were originally planning as of last year. Right. And what's your sense about what the core reason is here for this? I mean, is this a problem with the way that people are selling the product? Is it pricing? Are they too expensive? You know, I think the pitch with generative AI agents to enterprises specifically is these are tools that you can use to automate large parts of how your companies run, how people do their jobs.

3:01And I think that what sellers like Microsoft, but also OpenAI and Google and Amazon and others are finding is that that's a pretty high bar for enterprise customers to spend on, especially because a lot of the time, the buyers of this software don't feel confident that the AI can function perfectly without making mistakes. I think it's also just a function of the fact that a lot of large enterprises have to kind of overhaul the way that they use software or the way that people do their jobs in order to embrace these AI agent tools. And that process is taking maybe a bit longer than the sellers had hoped.

3:38Right. So it's more on the customer side. It's not actually a problem with the product. I mean, I think, you know, these products have been promised as something that can meaningfully replace the work that a human does a lot of the time. And, you know, from the customers I've spoken to, not all of them believe that the products currently live up to that promise. At the same time, a lot of customers are optimistic that, you know, we're going to get there soon, maybe early next year. But I think for now, it can be a little hard to justify spending meaningfully on AI agents in the enterprise. Is Microsoft alone here in this shifting strategy story?

4:13You know, it's really not. I mean, we reported, my colleague Sri reported last month that OpenAI has also scaled down its own targets for how many AI agents it can sell to corporate customers. And I think we've also seen some similar things play out at other vendors like Salesforce, but also Google, Amazon. I think across the board, we're seeing a readjustment in these firms trying to figure out how much demand there is for these products, which to be fair are kind of a brand new proposition and somewhat untested in the market. So it makes sense that there would be some adjustments taking place.

4:48I am curious for sales teams, how good AI has been for them? Because on one hand, as you pointed out, they've had some challenges reaching their quotas. On the other hand, I mean, everyone's buying AI, so it's a good business to be in as a salesperson, despite how difficult it is. Do you have any sense how lucrative this has been in terms of compensation for people who get paid on commission of these AI products and services? Is it at all familiar to what we saw in 2021 when people were rushing to buy software? Is it a fundamentally different story? You know, I think it is similar, but if anything, it's just been a a lot more uneven.

5:26I think on the one hand, there is extremely strong demand for generalized AI chatbots, things like ChatGPT for enterprise or Microsoft's Copilot that anyone can kind of just use to look things up on the side. I think where it gets a little bit more tricky is selling these AI agent tools that are meant to meaningfully automate large swaths of work at these companies. And from what I've heard, it has been trickier for salespeople to hit the goals that Microsoft or other companies have set, which could also just be a function of the fact that Microsoft wants to sell a lot of AI agent products and set really high goals for its salespeople last year.

6:06Right. Great. Well, Aaron, thanks for coming on. We appreciate it. And we'll talk to you again very soon. Thank you. Okay. Everyone in tech is watching the bond market more closely these days as big tech companies issue debt to fund their extraordinary capital expenditures and the credit rating agencies are a group that are central to that story that sometimes get overlooked. My colleague Ken Brown's column out today in our weekly finance newsletter assesses the extent to which the rating agencies and S &P has been doing their job properly, which as he points out is sometimes a contentious point given who has to pay them in the first place.

6:42Ken, welcome back to the show. It is great to have you back. Hi, Akash. So let's talk about the ratings agencies. I have a bit of a meta question for you. Okay, lowercase meta, not uppercase meta. If you were to give a rating to the ratings agencies, a letter grade in terms of how effectively they have been doing their job in the context of this AI debt story, what letter grade might you give them? Well, I mean, so far so good. I'd probably give it A, which is a pretty good rating. But what they always say is they put companies on watch for possible downgrades when they're like getting a little nervous.

7:19So I think I would keep them on watch for a possible downgrade just because it's so early in this and they've really only, you know, rated one big complicated bond. And then they've been watching these companies like, you know, all the big the big debt issuers. And so I'd say it's a little early to to see how they're actually doing. But the early signs are pretty good. Right. And the one bond rating you're talking about is is meta uppercase meta this time. Right. Right. So, yeah, Meta did this deal in Louisiana to fund this mega$27 billion data center. And they did it because they didn't want more debt on their books.

7:57They did it through a special purpose vehicle, which meant it basically doesn't sit on their books, but they borrowed the money. It was a complicated deal. S &P spent a ton of time raiding it. And that's really been the first big one. And that's where they've stepped in and joined the party. Right. Broadly speaking, I'm curious, and I say this knowing that tech companies haven't issued as much debt as they have in other industries. But broadly speaking, I mean, credit ratings around tech companies, they're pretty good, I imagine? these guys i mean these tech giants microsoft and google and all that they they generate so much cash and they borrow relatively little that they are pristine credits they you know there's very very little risk um i we were talking earlier microsoft has a triple a rating uh which is the highest possible it's higher than the u.s government so like it doesn't get any better than that um and so yeah the credit rating agencies and the bond market generally haven't been that important to tech.

8:57I mean, some parts of tech, you know, chip companies borrow and such like that, but the big software companies know. And so this is new. And so this is a test. Right. And I'm curious for what you might be watching for then as these tech companies move to issue more debt, if that's the way they plan to finance all these capital expenditures. I mean, what sorts of things would bring their ratings down? And what sorts of flags might you be looking for in this scenario where we know ratings agencies, you know, they get paid by these guys in the first place. So, you know, they got to be doing their job properly.

9:33Right. There's an inherent conflict of interest, which is these rating agencies give a rating, but they get paid by the companies that rate, that issue the bonds. And so this has been a problem forever. No one's ever solved this conflict of interest. So look, the giant tech companies, they can issue way, way, way more debt than they have issued. There is not going to be anything there. What I'm looking for is smaller companies. Oracle is one. They're on credit watch. They've issued debt and they have commitments. And then, you know, so that'll be rated, right? But the biggest question in all of this is all the private credit, the private debt market, which has boomed in the last decade.

10:11and they have come in with a lot of, you know, they've issued a lot of debt and that is not rated and that is not transparent. And so we just don't know what's out there and what the terms are. And then we have companies like OpenAI, which is committing to a lot of debt and a lot of basically say, we're going to generate a gazillion dollars in revenue. We'll be able to pay off this debt. But right now they don't generate, they generate a lot, but not nearly that much. And so those are the areas that we're focusing on. Who are the big names in private credit that we should be watching? Well, so it's the big private equity firms like Apollo and Blackstone, but it's also firms like Blue Owl, which was involved in the meta deal and has done some other deals.

10:59And so there's a bunch of other players out there that specialize in that. And, you know, they're very opaque. And it's hard to understand exactly what they're doing. And so, you know, we keep asking, but it's going to be a challenge. Now, you also wrote about how the ratings agencies have been dealing with crypto. And talk a little bit about what are they even rating? You know, you wrote a little bit about Tether. And, you know, we know there's the idea that these stable coins are supposed to be backed by reserves. But that's, in my experience, it's not debt, right? So what exactly are they rating?

11:39So they're not real. They're not bond ratings. They're not credit ratings. They, you know, credit, the credit rating agencies look at financial stability for these stable coins. So Tether and Circle and some of these others are stable coins, which means they are one-to-one against the dollar. They should not be volatile. They're almost like cash, crypto cash, right? And so the credit rating agencies have gone in and said, well, how likely is it that the value of this thing is going to be one-to-one with the dollar? And so they had a rating. They have five rating, you know, one to five, five being the worst.

12:15Tether was at four. They downgraded it to five. Tether is by far the world's biggest stable coin. And they did it because Tether owns a lot of very safe stuff to back the stable coins, but they also own some risky stuff. They own Bitcoin, they own precious metals, they own loans. And these are things that are volatile. And so the portion of that that they own, the portion of their overall holdings in this risky stuff rose from like 17 % a year ago to 25 % this year in the last quarter, most recent quarter. And so they said that's too high. The stability of this stablecoin is not necessarily there anymore.

12:58And so they lowered it to their lowest possible rating, which is weak. Right. Last question for you, you know, as you think about all this debt that's being issued, certainly in the AI story, if we come back to that, you know, if you think about the bull case and the bear case of this story, thinking out a year or two from now, what is the bull case and what's the bear case? Well, so the bull case is these companies, these giant companies have a ton of cash. The other bull case is it's very early. You know, these guys can write that the interest payment checks for the next couple of years out of petty cash.

13:33This is not a big deal for them. So nothing probably will happen in the next couple of years in terms of bad debt. What would happen is the market would get nervous and stop funding some of these companies. So say they stopped funding OpenAI, like that would be terrible for that company. It wouldn't be terrible for the credit markets, but it would be terrible for that company. So that's both the bull and the bear case. I mean, the real bear case over time is we see OpenAI doesn't grow as fast as it thinks, and also private credit market tanks, and it's a real surprise. So those are sort of the bear case scenarios.

14:11Great. Well, Ken, I want to thank you for coming on. I think there's lots there to maybe pick up with next week in your next column. So we'll end it there, but we'll talk to you again very soon. Thank you. Okay. Well, as bubble talk persists in the AI sector and the tech sector at large, venture capitalists have the difficult job of still trying to make long-term bets and predicting the future 10 years out. The business of venture capital is also in a fascinating moment right now. And to talk about all of that, I want to bring on Nnamdi Okike, Managing Partner and co-founder at 645 Ventures. Nnamdi, welcome to the show.

14:48It's great to have you here. It's great to be here. Thanks for having me. Appreciate it. So I want to talk to you a little bit about some data that I was reading a few months ago, PitchBook and the National Venture Capital Association, where I know you're a board member, they put out their quarterly report on funding data. And we're in Q4, we're waiting for the Q4 report to come out. But at least as it relates to the first three quarters, I mean, one of the points that fascinated me is they said, with respect to LPs and fundraising from venture capital firms, we are sort of trending towards what could be nearly a decade low.

15:27And, you know, I wanted to get your sense on why that's the case right now. I mean, you know, why are venture funds having so much trouble fundraising from their LPs? Yeah, it's a great question. I think there's a few reasons. I think one is there's been a lack of distributions going back to LPs in the past couple years. There's been fewer IPOs, fewer M &As, and obviously LPs have portfolio construction, and they want to have a reasonable amount in venture, but not too high an amount in venture. So I think their portfolio construction is a little bit thrown off due to lack of distributions. And I think that really means they can't put as much into funds.

16:04I think there's also been an increasing pace of fundraising by funds. And I think that is now kind of working itself out in the system in terms of how much capital LPs can put into funds. So I think there's a myriad of factors. I also think LPs are being thoughtful in terms of where they want to place bets and thoughtful in terms of what the returns of the asset classes are going to look like over time. And I think the previous vintages, especially the 21, 22 vintage, haven't been very stellar in terms of returns, which I think for some LPs has given them some pause. Now, I just want to come back to that point you made about the pace having increasing for these venture funds.

16:44Why is it that the pace of these fundraising events is increasing if the total amount of capital that LPs are giving them is decreasing? How does that make any sense? So I think you got to go back the past couple of years. So what you saw the past five, six years is that the amount of time between funds became much shorter. This is right around 21, 22 timeframe. And so funds were raised, being raised faster and more capital was going into the system. And I think if you look at those funds that were raised, say, four or five years ago, the returns have been lagging. There is very little DPI. I think the top quartile distribution to paid in ratio for funds raised in 21 is like, is much less than 1x.

17:26It's I think for even the best funds, it's maybe 25 % of what they raised. So there's been very limited distributions. And you start to see that working itself out now in terms of LPs, again, saying, well, if we're not getting capital back from these funds, why should we be reinvesting or putting more money into these funds? And so, you know, venture is a cyclical asset class. It does move in waves and LPs need to see returns and distributions to have confidence that it's a great place to be putting capital into. And I think some of that is driving what you're seeing in terms of LP contributions this year.

18:03And so we've seen IPOs pick up slightly. It's not the avalanche that people, I think, were hoping for. But I mean, they have been picking up. Now, we'll put the performance aside of these new companies that are going public. Is it not helping distributions at all? I mean, is the situation at all getting better, at least for LPs? I think there's some light at the end of the tunnel. To your point, this year you've seen IPOs. So I do primarily invest in fintech. And this year you've seen companies like Chime and Klarina and others. To your point, they haven't performed great post-IPO, but at least they provided liquidity to the GPs and the LPs invested in those funds.

18:44So that's a good thing. I think generally what you find if you look at private markets is that there has been an elongation of time from say first early investment from early stage venture, which is what we do. We invest at C and series A to exit. I think median period of time between initial investment or a company being founded and IPO is now upwards of 13, 14 years for even the best companies. That's very different than what it might have looked like 15 years ago, where periods were much shorter. And you also have this kind of growth of late-stage investment. So if you think about a company like Stripe, for example, how long they've been private and how high they're valued in the private markets, but again, haven't had the exit event.

19:27And so all of those things, again, impact the LP perspective in terms of their IRR. You know, LPs think about both IRR as well as total value to paid in, total multiple. but you're just elongating the period of time in which you're investing in that that's something that LP is taking into account. Right now I want to ask you about another data point from that report in October venture debt is at its highest level in quite a few years what's the story around venture debt right now? The venture debt market's always very interesting we obviously saw the collapse of Silicon Valley Bank a couple of years ago, kind of largely driven by venture lending practices.

20:09The venture debt market is interesting. The way we think about it for our portfolio companies is it can be a complement to equity financing. It can enable companies to raise a bit more money. The venture capital funding, equity funding is typically the backstop of venture debt. But I always get a little bit wary when venture debt, to your point, levels are very high because, you know, venture debt is being provided to companies that typically aren't profitable, don't have, you know, positive cash flows and are really reliant on continual fundraising. So if, for example, take AI, right? If the fundraising market for AI companies drops or dries up somewhat over the next couple of years, you know, those venture debt providers are going to be in tough shape in terms of those companies being able to raise more money from the equity markets.

20:55And typically companies don't have a lot of physical, well, I guess in the case of maybe data center companies, they have assets, most software companies don't have assets. So you talked about getting weary when levels are too high. Are you weary right now? I haven't looked at those multiples really closely, but the data point you're providing in terms of them being at, you know, historical highs, that is a little bit concerning. Yeah, I mean, yeah, it's pacing to be the biggest year in 10 years. That's as far back as the report went at least. So that's as far as my notes go. That is concerning to me, definitely.

21:30Let's talk briefly about valuations. You know, one of the things that I want to get a sense from you on as a student of the venture capital sector is everybody talks about valuations being high, and that is certainly a reflection of the competition for deals and everybody trying to go after the same deals. Mechanically, what has to change for those valuations to come down? on when do you think the music, quote unquote, stops? I mean, the stock market is one thing, but is it waiting for the stock market to sort of translate into startup valuations? What tactically has to happen for competition for these deals to decrease?

22:12That's a really good question. There's a couple of factors that drive valuations, especially at the early stages of venture, even growth stage, right? The first is just the pure supply of capital. How much capital is competing for deals? This is a supply and demand question. So when there's a plethora of capital in the market, typically valuations go up. There's just more demand. So suddenly all the scarcity in LP fundraising, it starts to actually have an impact. Yeah, so over time, to your point, you'll start to see the impact of less capital going into funds, less capital will go into companies.

22:48and that is one of the checks and balances of venture in terms of investing and valuation. I think the second thing is, how do the venture investors perceive the returns? So what you're seeing, what you've seen the past couple of years in AI is that there's been this race to invest in companies where the belief is that at the end of the day, the outcomes are gonna be significantly large. And so you've seen historically large rounds getting done much earlier than historically was possible. So before co-founding our firm, 645, I was a growth investor for about eight years at Insight Partners. And historically, growth investing was very much based upon fundamentals of performance, quality of business model.

23:30Yes, growth, but also path to profitability, underlying margins. How good is your business, right? I think investors have gotten away from that a bit in this kind of period of time, especially for AI companies, where it's all about extremely rapid growth, but where the fundamentals of businesses are getting lost a bit or are just unknown. The reality is in AI, there's new business models being experimented with, but we don't really know per se what a great AI business looks like at the end of the day. We don't have the metrics in the underlying business quality that we might have for a traditional SaaS company or even a consumer company, right?

24:07And so I think the result will likely be that as things shake out, there'll be a flight to quality in terms of high quality business models. How quickly does that happen? Are we talking first half of 26? I would say over the next two years. Okay. I think you're starting to see a few of these things starting to take place. To your point about supply of capital, that's starting to manifest itself. I think the public markets sometimes are a signal. So if there were meaningful declines in valuations, Now, there aren't a lot of public AI companies, so it's harder to comp, right? But if you saw, you know, certain companies drop, so NVIDIA as an example or others, there might be a little bit of an effect on the private markets.

24:55But at the end of the day, typically it's based upon things starting to shake out in terms of business model quality. And I do think if you look at, again, some of these AI companies, how much they're raising and how fast they're raising, there has to be a shakeout because the multiples that are being applied to them are so extreme. Yeah. You're seeing companies raise that. Some of them, they don't even have revenue, let alone products, some of them. So you like, I mean, we like to talk about revenue multiple, but in some cases, there's no revenue. So there's no revenue. How much is how many people you've managed to hire?

25:26Those multiples are also pretty crazy. Namdi, I want to thank you for coming on. It's a great conversation and we certainly will be watching. We appreciate the time and we'll talk to you again very soon. Thanks for having me. Really enjoyed it. Thank you. Okay, let's turn to the future of travel and late stage tech. Get Your Guide is one of Europe's major travel experience platforms. And the company sits at an interesting moment in the industry. A major competitor, Kluk, is preparing to go public. Europe is tightening rules for digital platforms. And late stage tech is navigating a tougher funding environment.

26:00Here to comment on all of that is Johannes Rex, CEO of Get Your Guide. Johannes, welcome to TITV. It's great to have you here. It's fantastic to be here. Thank you so much for the invitation. So I want to talk a little bit about the industry that you're operating in, the competitive environment, and then we'll get to get your guide in just a minute. Look, the travel company that I think people probably have on their radar, at least as of late, is Navon, which went public in October. Shares are down more than 35 % from the$25 IPO price that they went public at. I wonder what you chalk that up to.