In this episode of 'The Next Next,' host Jason Jacobs interviews Hadley Harris, co-founder and general partner at Eniac Ventures, a seed stage venture capital firm established in 2010. The discussion delves into Hadley's extensive experience in investing in AI, data, developer tools, SaaS, and healthcare. They explore Eniac Ventures' history, its evolution, and its increasing focus on AI-first companies, with 13 of the last 14 investments fitting this category. The conversation also covers general trends in venture capital, the current state of AI, and its implications for the future of labor and quality of life. Hadley shares insights on the timing of investments, the potential societal impacts of AI, and the importance of building companies with a long-term competitive edge. The episode concludes with a discussion on potential business ideas in the sports coaching and analytics space, leveraging AI to make high-quality coaching accessible to more people.
Exploring AI-Driven Ventures with Hadley Harris of Eniac Ventures In this episode of The Next Next, Jason Jacobs hosts Hadley Harris, co-founder and general partner at Eniac Ventures. Since its inception in 2010, Eniac Ventures has made significant investments in AI, data, developer tools, SaaS, and healthcare. The discussion delves into the evolution of Eniac Ventures, from its early days focusing solely on mobile-first companies to becoming a pioneer in AI-first investments. Harris shares insights on the AI landscape, the timing of investments, the impact of AI on various sectors, and societal implications. Additionally, the episode explores the practical aspects of venture capital, including the use of AI in internal operations and the emerging trends in secondary markets. Jacobs also pitches an idea around using AI in the sports coaching and analysis space, seeking Harris's feedback. Tune in for an engaging conversation about navigating and harnessing the potential of AI in venture capital and startups.
00:00 Introduction to Hadley Harris and Eniac Ventures
00:55 Hadley's Journey and Eniac's Evolution
01:16 The Changing Landscape of Venture Capital
01:38 Deep Dive into AI and Its Implications
04:12 Hadley's Early Career and AI Involvement
05:37 The Impact of AI on Various Industries
09:18 Investment Strategies and Timing
12:14 Challenges and Opportunities in AI
15:14 Future of AI and Venture Capital
24:25 Bootstrapping vs. Hyperscale in the AI Era
29:37 Transition from Mobile to AI
30:13 The Evolution of AI in Business
32:03 AI's Role in Modern Companies
33:38 Balancing AI and Human Expertise
38:11 Ethical Considerations in Venture Capital
42:24 The Future of Liquidity in Venture Capital
47:04 Exploring AI in Sports and Fitness
52:33 Final Thoughts and Encouragement
Jason Jacobs: Today, on The Next Next, our guest is Hadley Harris, co-founder and general partner at Eniac Ventures, a seed stage venture capital firm, established in 2010. His investment focus includes AI, data and developer tools, software as a service, and healthcare. Now, I was excited for this one because EAC has been doing a lot in AI, even before it was cool, and I've also seen Hadley speaking and writing about the topic.
Quite a bit. They've backed several companies recently that are AI first. In fact, Hadley said that I think it was 13 out of their last 14 companies fit that profile. And so I was dying to dig in on what he's seeing, how he's thinking about it, how his perceptions on the category of change over time, what they look for.
What they're scared about and where he thinks the future is going, and this episode does not disappoint. We talk a lot in it about Hadley's journey, about Eniac's inception, what led them to get started and how they've evolved over the years. We talk about venture in general and what's happening at Seed Stage, what's happening at Growth stage, and how the landscape is changing.
Both from AI, but also from other factors like what's been happening with the public markets and what's been happening with M&A and, and also an increase in secondaries as a way to get seed investors liquidity in companies that have broken out, but remain private and will be for quite some time.
And of course we talk a lot about AI. We talk about Hadley's thoughts on the LLM side and the models. We talk about application specific. , we talk about verticals where Hadley thinks that at the application level there, is more defensibility. And we also talk about some of the trends and patterns he's seeing in the strongest teams that are working with these tools.
What the implications will be on venture over time and what the implications will be on bigger picture stuff like the future of labor and quality of life, here in America and abroad. At any rate, without further ado, here's Hadley. But before we get started.
I'm Jason Jacobs, and this is The Next Next. It's not really a show, it's more of a learning journey to explore how founders can build ambitious companies while being present for family and not compromising flexibility and control, and also how emerging AI tools can assist with that. Each week we bring on guests who are at the tip of the spear on redefining how ambitious companies get built, and selfishly the goal is for this to help me better understand how to do that myself.
While bringing all of you along for the ride, not sure where this is gonna go, but it's gonna be fun.
Okay. Hadley Harris, welcome to the show.
Hadley Harris: Thanks, Jason. Happy to be here.
Jason Jacobs: Yeah, thanks for making the time. And we were talking a little bit before I hit record, but I mean I've No, wait, is it Eniac? That's how you say it.
Hadley Harris: Eniac or, I usually Eniac some people say
Jason Jacobs: Yeah. So I've, I mean I've known Nihal a long time and I've known a number of your portfolio founders, and I'm sure we have a ton of connections in the New York and just brought our startup ecosystem as well.
But the reason I reached out to you and asked you to come on the show is you did a tweet back in February and it was something to the effect of 2021 was about growth at all. Growing really fast at all costs. And 2025 is about growing really fast at low costs. And I looked into it a little bit and you've been thinking about and investing in and active and AI stuff for, longer than the tire kickers. And yeah, so I thought it'd be a really interesting discussion and that you would have a perspective that I could learn from, which is what the show's all about.
Hadley Harris: Yeah. I'll do my best. Sounds great.
Jason Jacobs: Great. For starters, maybe just give an overview for anyone that's not familiar of of EAC and and what you do.
Hadley Harris: Sure. Yeah. So we're a seed stage venture capital firm. I co-founded the firm about 15 years ago. My my partners and co-founders go way back. We all studied engineering at Penn together, way back. In the late nineties, and then coincidentally all had somewhat similar past, came out, came outta school worked as developers for a while and then started starting and helping grow a bunch of venture backed businesses.
The first one that I was involved with is called lingo. And to your point about ai, this is a very early AI company. Started in 2007, I got connected with the founders who there were, it was an MIT spin out and they'd figured out a new way to do voice recognition. So it became the first voice based assistant.
This is pre Siri actually. Eventually we acquired and got folded in and it became Siri. So that was just, I didn't, I wasn't, at that point building AI was extremely difficult and, you weren't using off the cell, off the shelf APIs and models and whatnot so I can't take any credit for the tech mostly around all the kind of, a lot of the business aspects.
But that got me excited about the potential of ai. And this is a time when people were barely using the term ai. In some ways it was considered a dirty word. But a lot of my career since then especially from an investment point of view at ENaC, has been focused on AI companies. Again before.
Before it was cool. Obviously the last couple years have been very different.
Jason Jacobs: Uhhuh. And and so you started your professional career around the time that I did, which was, late nineties, right in the cusp of the.com boom. When I look backwards from 2025, it, it feels like it was the internet and then it was mobile and then it was the cloud, and now it, it feels like AI is the next kind of big sea change.
I just want to stop there. Is that how you think about it as well, or something
Hadley Harris: Yeah, very much yeah I entered the workforce in 99 as a developer, and that was height of the.com boom. Obviously that kind of crashed and then came back. I see that the way you described it, I would say in my opinion the internet and AI are a higher order of magnitude mobile and cloud a little less.
They were very important when we first started eac, actually our singular thesis was that mobile was the next kind of evolution of computing. So we only focused on for those first few years on mobile first companies, and that, that changed over time. Is that no longer made sense? But yeah I agree.
Although I do think we're entering a time that will be as, if not maybe more impactful on the world than the internet was.
Jason Jacobs: Uhhuh and I've heard you talk on other shows and it sounds like at the earliest stages when you guys come in it is less about the business since there's not as much to judge and it's more about the. The founders. I, I guess my question is, when you think about these sea changes, do, are there can you look at history to guide how to adjust as we enter an next sea change?
Or is it similar to the quote, if you've met one family office, you've met one family office, like if you've met one sea change, you've met one sea change? Or is there actually learnings from the prior ones that, that, that could inform how to proceed heading into this one?
Hadley Harris: Yeah, no, that's a great question. I think like you, having been through these other sea changes, I think there are lessons to be learned there. But then there, so it's in the middle, right? And then, but there's differences in how they all play out I think will be quite different. Do think it's helpful.
I, I think even just thinking about kind of the timing of when the best companies will be started. Like I, I do think we're right now in a golden age of company formation where you've had we're two years in. Certainly some important companies have been created, but at the very beginning, usually a lot of stuff gets thrown against the wall that doesn't stick.
And then people start to understand. More of what this kind of wave will look like. And then they maybe in a better bit situation to stay with that analogy of surfing that wave. So I think there's probably some lessons to be learned from the past around timing. And there's probably some other areas, but it, but you have to be careful these things because every situation's different.
These technologies are very different. The industries and way they all affect society and business I think will be different.
Jason Jacobs: Do you, in, I guess this is an ENaC question, but also a Hadley specific question. Just different partners might have different philosophies, but do you have a philosophy in terms of how you like to time the paddling in terms of who you back when the wave is coming and what I mean is that, like you said, sometimes there's this first wave of people that are really feeling the way in the dark, right?
And then there's throwing stuff against the wall because there's no point of reference for how to think about it. And then there's learning. And then the second wave of fast followers can sometimes, learn the hard lessons that off of someone else's peril. And come in. A lot more pragmatically with more of a game plan?
Do, do you sit out and watch for a while or do you like to be in that first wave?
Hadley Harris: Yeah, no, it's a great question. I think our general approach here is it's hard to time these things and to focus on the best founders and that the best founders will figure out how to ride the wave. So while my gut is that we're in somewhat of a peak time now, that hasn't really.
We're not banking on that. I think that can be a hard thing to bank on, on timing. So we tend to invest at a relatively consistent pace over time. We've done like something like 1415 or, give or take a few investments for the last 10 years. That way you don't have to you don't have to be susceptible to market timing.
I think what a lot of investors do is during kind of hot times, that's when they deploy their capital and then things free freeze up and then they deploy less. If you actually do that, you're gonna pay higher, buy-in prices over time. So I'd say the two years leading up to this were quite cold.
A lot of investors had deployed very quickly in two, 2000, 2021, whether that was crypto or other things driven by interest rates, then they didn't have any capital. So that was like a great time for us. We were, we saw very little competition like companies raising, it wouldn't move that fast.
And that was because we didn't we specifically didn't go too fast in 2000, 2021. Now we're back to hot times. While my gut is that, that this is a really great time for company formation and we're seeing a more great opportunities this quarter actually than ever before.
Maybe we are deploying like a little faster. We will try and be somewhat consistent over time.
Jason Jacobs: Huh And just generally as a firm are there do's or not dos in terms of can you go anywhere or do you stay away from certain categories or certain business models or deep tech or think things like that? What are the guardrails, if any?
Hadley Harris: Yeah, I don't think there's any kind of official guardrails, but we tend to be software focused. We have done some kind of soft hardware software kind of full stack type stuff over the years. It hasn't been the best category for us. I think we generally but our kind of tech and software oriented, so one thing we don't do, just to make it more simple of what we don't do, we don't do like brand oriented sneaker companies or whatever that, that, for a while it was actually a very popular thing to, for, in VCs to invest, especially in New York.
And to be honest, I never got it, and I'm wrong quite a bit, but this one I think I was right. There really was like a lot of value destroyed investing in those types of companies. They're just not venture backed companies. When your only mode is brand I think it's difficult to be a venture backed business.
So generally tech software oriented, and these days I. Like mass majority I would say, maybe 13 out of 14 investments we did last year, I'd consider a AI first company. It's just, while it's crowded, it's also just so natural that there's this, why now there's all these use cases and problems being solved.
It never can be solved before. And that's just generally a good place to invest versus something that has going into a very crowded space.
Jason Jacobs: So you, you just touched a little bit on the question that I was planning to go to next, which is that you talked about how, if you look at the cloud and mobile for example, those are both huge, but you actually think AI is gonna be bigger, right? As big as the internet. When did you come to that conclusion?
What were the data points that led you to that conclusion? And then what do you think the implications will be looking forward? Gosh that's that's almost an impossible question to answer. too big. Yeah.
Hadley Harris: Yeah. If you look at mobile. It was mostly a consumer, a lot of the value was built within consumer. There wasn't, there's obviously some like enterprise mobile stuff, but I don't think there was that much there. And obviously our companies like Uber and Instagram, they got built and that was important.
And then if you look at cloud, it was more the opposite. Like a lot of the value got built. Obviously the hyperscale, scalers built these like cloud businesses and that was really important end users. I don't think it was touched on that much, like it's been abstracted away from end users.
I think that AI will have a big impact on both of those things. We're mostly seeing B2B I think consumer will be really interesting. I think we finally have kind of a shift that will be, since mobile. I don't think we've had a shift that will allow big new consumer companies. And you're starting to see that with perplexity, obviously open AI itself.
But I think there'll be a lot more and then just. I think its impact on businesses will be quite a bit bigger than than cloud because it actually affects, it's not just software. It affects labor. And I think what you're gonna see is that a lot of labor is gonna get disrupted by AI in a way that cloud and mobile and the internet for that matter never did.
And that's gonna be really incredible for businesses who can run their businesses more effectively. I think it will come with a lot of kind of societal disruption that, I think we as a society need to be ready for. 'cause I do think that this, for centuries people have been saying that technology won't affect labor and that thing people adjust.
I think the rate of change here and the effect of change will be too much for society to keep up with. But, we'll see.
Jason Jacobs: That's one of the things I'm. Worried about. I, it if, I'm only a few months into really looking into AI in, in earnest. And what I've seen so far is that it is easy for me to see and grok and SaaS will be under pressure, for example, or how companies that were really human intensive for very mundane operational stuff like that, it's easy for me to see how disruption will, how valuable you destroyed.
It is also easy for me to see how short term unsustainable value will be created by new players. It's harder for me to see how durable new businesses get built. And I'd love for you to just. Talk a bit about how 'cause you're in the business of value creation, not value destruction. And and so just how you see durable value getting created with ai
Hadley Harris: Yeah. Yeah. I think within B2B businesses there'll be a lot of durable value. I think a lot of the durable value in what I'd call more horizontal, just general information worker type stuff will probably be eaten up by a few very large companies, probably. We'll see. But, I think that's where you open ais and your Microsoft's philanthropic and whatnot will build a lot of products that will eat a lot of value there and a
Jason Jacobs: And is that oligopoly already set in your mind at the LLM level?
Hadley Harris: I doubt it. I think people generally underestimate the change that happens, so I maybe I also wouldn't be surprised if some player we haven't heard of. There's I meet a lot of founders. I don't do as much kind of, foundation model investing, just 'cause we're relatively small and those things are very expensive.
But yeah I often, I've been meeting founders that are taking brand new approaches that who knows if it works. Could be, I think what you saw with Deep Sea is interesting. No one saw that coming. A lot of smart people thought you couldn't do that shit. That's pretty cool.
But yeah, so back to course, I think, but I do think there'll be some set of oligopoly that will. That will attack that between the newer model companies and someone like Microsoft that just has this crazy advantage of already having distribution. Where I think you see the o the other area where I think startups will mostly impact is gonna be more in vertical solutions.
So a lot of the investments we're looking at, especially at the application layer we're spending most of our time now is within certain verticals. I think like healthcare, financial services are two examples of this, where I think it's less likely that those companies, there's a lot of nuances to those industries around kind of privacy. Workflows that are, relatively specific. And then there's that's those are like the big industries. There's tons of these very small industries that either have very old school vertical SaaS solutions that they're using, or maybe you could never have one. I think if you look at like legal and like consulting and these types of areas, they were all very human intensive and you can actually build software that kind of solves these problems because of these models' ability to understand and communicate unstructured in an unstructured way.
To your point you have to think about, okay what is the long term moat? Because the AI itself is unlikely to be a long-term mode. A lot of these founders may try and point to some proprietary data sets, and in some cases maybe that's true, but I think that's a hard thing to build your company on.
I think more likely what we're generally looking for is there's some like second act. That is not necessarily reliant on ai that can become that long term moat. You may see that as becoming the new system of record that takes over. There may or may not be an existing system record.
Another example is building some sort of marketplace. So like a two-sided marketplace, whether that's B2B or B2C. Marketplaces tend to be great kind of moats if you can build both sides of the marketplace. So that's at least how we're thinking about it.
Jason Jacobs: Is it too early to have role models to look to that have made that transition?
Hadley Harris: Probably, we are just so early, like I think especially for this type of company, these like vertical AI first companies we're still, the ones that are doing bas probably formed two years ago. It's interesting like companies that were started too long ago we're seeing have trouble adapting.
They've just been structurally and from just a vision perspective not built for this environment, and they're tending to struggle and there's the kind of these new entrants that kind of come up. I know you talk a lot on the show about utilizing AI to build the company.
Like they're AI first and they're just like very agile and grow quick, grow quickly. They build a lot with a small team. Small teams tend to be better at innovating and moving fast. Yeah, I think it's gonna be these younger companies that are like probably founded in the last couple years or even being founded now that are gonna be the most successful.
Jason Jacobs: Huh. I hadn't thought of this analogy before, but I, I grew up in my early years professionally were spent in data storage startups and and so we we did a lot of work with the hosting providers, the exoduses and global centers, and most of the people on the show are gonna have no idea what we're talking about.
But remember Yeah. Because
Hadley Harris: Yeah. We had a
Jason Jacobs: both fogies. Yeah. Yeah.
Hadley Harris: We had a data center in downtown Boston. We had to go like visit every once in a while and someone had to move the wires around.
Jason Jacobs: but the reason I bring it up is that in 2000 or 2000 one, when the bottom started falling out, and all the.com shakeout started happening, if you walked down the rows of RAC after RAC in these hosting facilities, their customers were all the dot coms. And so they were very affected when all these dot coms went out of business because those were their customers.
So then the hosting providers suffered and. The analogy that I wanted to draw and get your reaction on is the tire kickers with AI that are propping up the revenue of some of these companies in the short term because they're like, oh I'm flatfooted and I need to do something and I don't, and there's so many tools and I don't know which tools, so let me go, just subscribe to all of them.
Yeah. And then, and I'm like that, right? Like I'm a little fish 'cause it's just me personally, but it's like I, I have all these different tools and I don't know which ones are gonna become my go-tos. I don't know how much I'm gonna leverage them ongoing, but out of the 10 or 12 subscriptions I probably have, I'm probably gonna end up with two or three when all's said and done.
Do you know, do you worry that about, if you look at Cursor as an example, do you think that's durable or do you think there's a big kind of tire kicker premium that's not sustainable?
Hadley Harris: So yeah I, this is something we talk about a lot. I think it, it's interesting you see this play out when you try and look at the the churn rate of some of these really fast growing companies. They tend to have very high churn rates, and a lot of it is, what you're describing is a lot of tire kickers, a lot of folks trying five things in parallel.
I'm not as worried about that at the overall usage level or like the size of the overall market because the, think about it this way. If you're running, five, you're trying five different, AI, first sales tools, eventually you're gonna pick one of 'em and then that's gonna get deployed.
A lot of these, like proof of concepts or pilots are done on like a small set of the company, and then the functionality of all these companies is evolving very quickly. So that will get a lot deeper. While four of the five will not make it, that one will be like, the use of that one will probably be far greater than it is of the four or five now.
But yeah it's an interesting dynamic. We're definitely seeing, and I think, especially when you see these announcements, someone, went from one to 10 or two to 20 million a RR when I have we've done some research just to understand these companies their turn rates are ridiculously high.
So it's almost has to be expected.
Jason Jacobs: And you talk about you, in, in this discussion you've been talking about the criteria that would make for more defensibility beyond just brand and in AI world, and you talk about the second act and the marketplaces or or things like that. In a prior podcast episode that I listened to that you were on, you talked about some of the learnings in the early days of eniac, and one of the learnings was that basic hits and doubles aren't gonna get you there.
It's a power law game. One thing that I'm chewing on that I wanted to put out there for your reaction is that in a world where it is harder to come by these moats and you can achieve some defensibility, but not as durably as the past, maybe that means that the life cycles of these companies play out faster and that the outcomes are more modest, meaning that venture starts gravitating, or at least some portion of venture starts gravitating towards a world where base hits and doubles are the game, and on base percentage is the game, and it's not power law any longer.
And I wanted to just put that there
Hadley Harris: That's a great question. I'm skeptical that would work. The one thing that you said that I think is important and I do agree with, is that the timelines I think will get compressed. So I think things will turn over. Much quicker. So that has the ability to change the whole dynamics of venture.
In terms of it just being more attractive, I'm still skeptical about the being able to double your way to success. I think even if there are less winners as a percentage wise, 'cause more companies are getting funded, I still think it will power. Until I see the power law that hold, which it never has in my knowledge and in venture, I'm gonna keep believing in it.
So I still think there'll be these gigantic outcomes that, as a power law will be such a big percentage of all the outcomes. How that might change how you invest and is, I could imagine, this isn't something we've executed, but I could imagine if the dynamic starts playing out, you may want to make more investments.
Because I do think the biggest companies will be bigger because of what we talked about with it eating up value within labor. But there may, the percentage of winners may actually be lower than the past because there's more companies getting funded, there's more founders wanting to jump in and smart people start companies.
So you could imagine wanting to take a broader approach that you're more likely to have these big outcomes.
Jason Jacobs: Did, do you think that the emergence of these tools changed the calculus at all as a founder in terms of when to go the hyperscale route versus when to bootstrap? And I know those are barbells and there's a lot in between, right? yeah. But just as a if you were starting a company would've changed the calculus for you.
Hadley Harris: I think it would, I think. So I haven't really seen this play out, but I think what is going to likely happen is you're gonna see more companies bootstrapping or raising very small amounts of money that they need, and then maybe not raising money after that. So I think I could see a world in a few years where a lot of companies only raise seed rounds and they never raise series A's.
And if I'm like Andreessen Horowitz and some of these very big multistage, that's what I'd be scared of. And it's one of the reasons we think staying small and staying early is a good place to be. I haven't really seen that play out right now there. I think there is a bit of a gold rush going on right now where I think companies have a sense that they wanna raise from just to be offensive.
Maybe. Maybe a lot of that money goes into more go to market than it does into development just given, how efficient some of these engineering teams can be. I think there's also this weird king making dynamic going on now where. There's a bunch of companies, I think you saw this, like legal is a good example, jump in and there's these AI for legal Harvey's wants to raise all this big money from certain investors to present itself as the king.
I don't know that space that well. I is, are they the best product possibly. Probably not, but that does create a little bit of a dynamic where when you're a big law firm, you're like, let's let's try the different products. And as you say, let's run proof of concepts.
But if they tie, I'm probably gonna invest in the one that like, andreesen put a hundred million in. 'cause they're less likely, they're more likely to make it. You know what I mean? So there is this weird like king making thing going on that I don't think, I think is detached from the actual money that these founders need, which is, I think that's a, in long term, that's probably not a good thing.
It's probably gonna cause a lot of problems but it is a weird dynamics going on that, that it goes against what we're just talking about in terms of just needing less money.
Jason Jacobs: Yeah. And if there's a fight to get in, then maybe there's big secondary. And if there's big secondary, then the founders don't, their incentive to care about what happens. On the other side of that maybe isn't as high
Hadley Harris: Yeah, that's true. Although I generally am in favor of founders taking secondary just because I think it makes it more likely that they'll go big versus, when you're partners bitching at you, you can make a lot more money at Google and, you could sell for a hundred million, which is an amazing outcome for a founder.
Us as investors. That's not that, that great, we wanna incentivize them to go for that huge outcome. So I do think secondaries are more aligned with us in terms of or help align us with the founders.
Jason Jacobs: uhhuh. One clarifying question. How do you think about reserves and follow on and do you have any type of opportunity Vehicle? Within the fund to go deeper in your breakout companies.
Hadley Harris: Yeah. Yep. That's a great question. We're about 50 50 in between kind of initial and follow on. So we have we're not investing out of our sixth feed fund which just start investing a little under a year ago. So yeah, about half of that will be the initial investments and then we'll generally invest in Series A's and maybe some BS outta that.
And then we do have a small opportunity fund that we can invest in, in later state rounds as well.
Jason Jacobs: Got it. And you mentioned that something like 13 or 14 companies that you have backed recently are AI first how do you define AI first? What does that mean to you?
Hadley Harris: That's a great question. And I haven't really thought about this, so I'm gonna. One is the kind of core product is, could, would not be possible without ai without, and by ai like recent kind of transistor based LLMs or similar type models. And probably the other thing I'd add to that's probably the main thing. The other thing is probably the problem they're solving was not previously solvable. I would think if I look back at least the last couple years, probably, they, all the ones that I think of that AI first probably fit that.
Jason Jacobs: And softball question to pimp the portfolio. Are there any examples that you wanna bring up that kind of illustrate those two criteria?
Hadley Harris: Sure. Let's see. Who gets it? Some love. We have a company that we invest in before chat. GPT came out called Attention. That's the leading generative AI based sales tool. So listens to and understands all your sales conversations, and then has agents that will do things on your behalf afterwards like following up or alerting the sales manager to certain things that are going on.
That I put that in a bucket of. We're very lucky that we're investing in some of this stuff before Che GPT came out. And then when that came out, it was like this huge rush in every investor was investing in this stuff, and it definitely got more, more crowded and then more on the infra level and invested in a similar time a, a few years ago.
True Foundry is a company that's infrastructure for enterprises to be able to deploy and maintain. Open source models, open source, LLMs on their own infrastructure. So think about large banks and healthcare companies. They don't want to be hitting open AI with that privacy mindset.
They want to deploy models like ALARM or something on their own infra. There's a lot of technical complexity to that and making it efficient. A true Foundry system allows you to manage all that in a very efficient way.
Jason Jacobs: I wanna go back to something you said before Hadley. You talked about how you earlier in EACs lifecycle, you were mobile only when you were starting out. And at some point that didn't make sense anymore.
You could almost argue, and I know it's not exclusive, but you're almost AI only now.
And so I'd love to understand why it didn't make sense anymore with mobile and what it would take. For it to not make any sense anymore with ai because mobile's obviously still a thing, right? It's in everything, right? And AI is similar. It's not in industry, it's everything, right?
And yeah. So I just wanna pull on that.
Hadley Harris: That's a great question. So I think you'll actually probably see something similar play out. It's probably helpful to say we were mobile only partially for branding purposes. 'cause we were a new fund. We were a ti our first fund was 1.6 million. So we, we're a tiny fund. Hard to get noticed.
There weren't any mobile focused funds. It's hard to remember, but like 2010 peop mobile was this thing that, it was like, almost like ar vr now. It kept being promises, but it never came through. I can find you some Fred Wilson tweets where he was like saying how mobile was like, not never gonna be a thing.
It's like never. It's not hap it was very bearish. Obviously, great investor. So it was partially that, and we were all building these mobile first companies, so we were, it was a natural fit. I, at certain point, I think it was around 2014 or so, it just became artificial.
And it's like, what exactly is a mobile company? Every company has some mobile aspect, and I think that's even more true with ai. 'cause mobile, like we talked about before, didn't really touch a lot of like enterprise the same way as AI is or Cloud did. I think you could already argue that AI is, it's everything's ai.
It's like back to the, like we're talking about the internet. It's at one point there was like an internet team at a VC who was doing internet doing, then it's everything touches the internet, right? Like how. internet and probably before that there was like a software team, and I don't, these other guys maybe semiconductors or something like that.
I think AI is like that where everything will obviously utilize ai and then you just won't call, it won't be like, we have an a focus or AI thesis. It's just hopefully there'll be something within that maybe you focus on,
Jason Jacobs: So does that mean one day? If you're not AI first, then will everything that survives and thrives be AI first?
Hadley Harris: By the definition that I said before, probably not. Like I, I think what you'll find is there's companies that will use a lot of ai certainly within their development. I don't think anyone's gonna be. A engineering team that's not heavily using ai, that just wouldn't make sense given how good LMS are writing code.
I'll give you an example. We have a portfolio company that we backed originally, probably four years ago called Ghost. It's a B2B marketplace for excess inventory. So anytime like a retailer has excess stuff right now, the, they can sell it to like tjx, which is TJ Maxx and Marshalls, or try and move it in other ways.
This is like a auto, like a real B2B workplace that's done, that they're crushing it fastest growing company. It that we've invested probably in the last five years. Funny it's really not AI first at all. And it could definitely exist without ai. So it, the why now was different. It was more of an insight that that the founders had.
But if you looked at our engineering team, 'cause I was talking to the founders recently, like they're all, they're using all these tools. They're trying out all these tools. So like it is an AI company in what they're using, but it's not an ai why now and a AI use case per se. So by that definition, I think there will be non-AI companies that will be successful.
Jason Jacobs: We, the I'm trying to find in my notes the the two criteria I re refresh me again. So one was that the problem,
Hadley Harris: it up at the time, so it's, sounds a long scene thing. But yeah, I,
Jason Jacobs: the problem couldn't be solved
Hadley Harris: the core product is utilizing AI kind of an important part of it. It's not just an add-on and that the problem couldn't be solved without kind of these newer types of
Jason Jacobs: Yeah. So what I didn't hear mentioned is how building gets done internally. Do you find that the more companies lean into AI with their products externally, that the, they, that core that, does it manage to the index of the more they are externally, the more they build with it internally? Or is there a wide range?
Hadley Harris: Yeah. It's probably hard to say because so many of the newer companies are utilizing AI in their products. That, that there's not like a big data set of like non-AI companies like I could look at in general. I feel like they, that's probably true 'cause they're just more knowledgeable and they see the power of ai.
So of course why not utilize that as your team? I see a correlation between success and how heavily they use AI internally. And that kind of mindset, they definitely are moving faster. There's a huge advantage to being able to create, not only can you create product quicker, you can create product with a smaller set of people and smaller sets of people are much more efficient and they're much better at finding product market fit and iterating.
So that's like a huge power, especially in the early days. So I think, and the reason I don't include that to your point your question about in the definition is I think that's just table stakes now. Like you can't be building a software company going forward without utilizing these tools.
They're too helpful.
Jason Jacobs: I've had some companies on the show that where the technical team is technical and they get leverage from the tools but the non-technical people stay in their lanes and do non-technical things. And I have other companies, like one company, four co-founders, and one of 'em is technical, but all four of them are writing code every day.
Do you notice any do you have any point of view in terms of the, a successful recipe or one you have more conviction in or is it just team dependent and any different combination can work?
Hadley Harris: If I understand your correct question correctly I think everyone at the companies should be using ai. I think there's very few jobs even for this podcast. I imagine you're use using ai. Like I as a vc, we have tons of tools. We're constantly iterating with new stuff. I think AI's gonna really change vc.
I, so I think everyone technical and non-technical, I have seen that case as well where the tech, technical teams using cursor or copilot, what are those marketing people doing? Like I told you about attention, like their impact on sales teams is incredible. So like everyone should be using the latest stuff or at least experimenting and understanding how it can help them.
So that I say part of what you may have been asking is should the non-technical people be involved with a test with, like coding, for example?
Jason Jacobs: Yeah. Yeah. In, in other words like AI can help people with expertise to have more leverage or it can help people without expertise to to act as if, and I guess my question is when you're building an industrial strength company. Is it only for leverage and the experts should be experts?
Or do you think the non-expert should be pushed to act as if
Hadley Harris: Yeah, that's a great question as well. I'm not sure. I think you can I've seen both, so I'm not sure which is a better. One. I think the question that this makes me think of, which is something I think is worth a lot of people thinking about and I, there's like very smart people on both sides of this, is like within say engineering, what does the future look like?
Is, or is it gonna be like one senior person and a bunch of agents, or is it gonna be a bunch of more junior people utilizing agents? And I've talked a lot of people much more than me that kind of built engineering teams that are both sides. This, my gut is, it's more the first one, which is smart people at the top.
And then you have a lot of agents doing more the junior work and that there won't be as much work for junior people. But it's related to your question.
Jason Jacobs: Uhhuh and I mean I asked this on LinkedIn a few weeks ago because I've been hearing that debate both sides of it. If there are less junior people, then what becomes the path to becoming senior
Hadley Harris: Oh yeah.
Jason Jacobs: yeah.
Hadley Harris: It will be an interesting world. I don't know. I'm guessing you might have a small, there's so many more junior people than senior people. So right now you have this natural funnel, right? Hopefully that funnel remains and it's just who are the junior people that can break out, and become those senior people.
It's also a question of like time horizons. If that's a situation for 50 years, that's a real problem because you know you're gonna run outta senior people. My guess is by the time that long time goes by, that dynamic changes again, I don't know, maybe you have a GI and the world just looks so crazy that kind of one to many relationship doesn't stand.
Jason Jacobs: And I guess this last. Topic area is more like it's, I guess it's less with your ENaC hat on, although it's related to ENaC, but it's more like Hadley the person who's of a similar age to me. One, one of the things that I find that I wrestle with is that you're a vc, you have limited partners that trust you with their capital.
Maybe their capital's coming from people's retirement funds or things like that where it's
Hadley Harris: In our cases it's mostly that kind of thing. Yeah.
Jason Jacobs: yeah. And like you have a fiduciary responsibility to drive the best returns that you can. If you look at the implications of the companies that you back, one of the implications might be if they're wildly successful, that it kills a lot of jobs.
And my, I guess my question is if you aren't an impact fund or a social fund with a label on it, right? But you just try to be a good human that lives a good life, right? How do you manage. That fiduciary responsibility with trying to do right in the world. And is it, is it a responsibility of people in your seat or as any seat in any seat as fiduciaries to also think about those second and third order effects?
Or is it just someone else's problem?
Hadley Harris: Yeah. Yeah. No that's a tough one. I generally believe, and this kind of goes back to my beliefs around AI in the future. I tend to be an optimist in general, and I've, and I am a kind of AI maximus slash like. I think the end result will be very positive for humanity. I think we're heading into an incredible time for humanity.
I think AI's gonna solve a ton of problems. If you just look at like drug discovery and things like that, I think it's gonna be incredible. I do believe, and the time horizon's tough to say, we'll get in a situation where people won't really have to work. And I think there'll be a situation of mass abundance.
The question is how society gets there and aligns itself because that could go real. I think there's an opportunity to be really great. There's opportunity for a lot of shit to go down. And yeah I think a lot of leaders around the world are not prepared for that in any way. And, it's it's a bit of a scary situation, but I do believe there's the opportunity to.
To do that. And I do think a lot of the stuff we're investing in, maybe a little less us, 'cause a lot of it's driven by the kind of ba foundational layer are gonna drive that over time. So there's gonna be disruption. Cause there's gonna be bad things. The internet has caused a lot of problems.
It's also, allowed people to get closer and a lot of good things. So I think it's and we're pro and I do think it's up to probably things that are outside of my control of whether that works or not. It's more societal it's more around governments and kind of leadership which at least to this point in my career I'm not really involved with.
But I think I think the end result will be positive.
Jason Jacobs: Huh. Yeah, and I, that wasn't a question that it wasn't a leading question to suggest that you should be it. Because division of labor is, if you try to, if you try to do everything, you'll get, do nothing. EE every, everyone, to some extent, you need to stay in your lane.
You need to drive, you have a fiduciary responsibility to do and if the government does its job right, then. Then because I worry about that. I worry because mass abundance is only mass abundance if it's evenly distributed. Yeah, because otherwise if it's all accruing at the top, then you know how, like what happens to the rest of the people and how do they put food on the table if they're not being provided for and they have no means to provide for themselves,
Hadley Harris: a hundred percent.
Jason Jacobs: But that that, that's above our pay grade, though. That's not what we're paid to
Hadley Harris: The to be, yeah, for what it's worth, we don't invest in just more outta morals and things that we think are gonna, like directly harm society. I looked at a company recently that I thought might be an okay investment, but it I really thought it was bad for society.
It had to do with kind of healthcare and how people got information around healthcare and it just yeah, it just didn't feel right to me. The, certainly we are trying to make money and for our investors, almo, almost all of our investors are nonprofits of one way or some sort or another.
And that's something we, it's really important to us. But you also don't want to be like directly harming and investing in Juul or whatever. And, some company that's I think directly harming people.
Jason Jacobs: Huh And I I know that, no one has a crystal ball, but and I'm no expert on the venture business, but it, it, it seems that the, that liquidity needs to come in order to drive returns and that liquidity can come from the public markets or from m and a. Obviously the last few years it's been difficult to come by either of those things.
As this revolution plays out and accelerates do you think that side of the business, in terms of how liquidity will be generated, will change. And if so, how?
Hadley Harris: Yeah, it's actually changed a lot in the last four years or so, and I think it's not as broadly known, but yeah we've done a bunch of secondaries either directly in our companies or at the whole fund level. I think we return. Three or four funds worth over the last four years without any exit, without any IPOs or m and a because there's
Jason Jacobs: Is it, is that and what's the profile of the buyers in those scenarios?
Hadley Harris: For the, they usually are follow on investors for the direct ones especially like 2021 there was a lot of like very high price rounds where we sold to the new investors. And as seed investors, like generally no one cares, if you're Sequoia who led the a and b and then you sell people that can raise some eyebrows.
So it is a real advantage of being a seed investor. And then you're seeing a lot, right? And that's even, I think in the last year more and more secondary. Investors se specific secondary funds are going, trying to get into these kind of private companies because they're staying private so long funds that are wanna buy out like a portion of your fund.
We have older funds that have done well that we wanna liquidate to get money back to our those LPs and they have companies that people want access to. So I think you can see a lot more of that. I think not reliant on m and a, especially coming from the very early stages where, you can have, we, we tend not to sell unless a company's worth the whole fund going back to the power law.
But you tend to have these companies that, can be worth a fund or two. And I think it's good for everyone to sell partial part of that get cash back to our LPs. That's our job. So I think that dynamic will continue.
Jason Jacobs: Does that tend to happen when rounds are coming together anyways?
Hadley Harris: Traditionally, yes, but I think more and more it's even happening outside of that, and it's even happening at the fund level where it's okay, we'll buy 20% of the entire fund across the whole portfolio.
Jason Jacobs: Is there equivalent of like the way that you know, that a startup where it might be their time will engage with a banker to run a process, is the equivalent for a VC who's looking to drive returns through secondaries.
Hadley Harris: I maybe, but I haven't seen it. It's a, it's a relatively small community. A bunch of our LPs are getting into this as well. It was, even we, I would say over the last year and a half we did a secondary sale last year that lot of folks inbounded us.
So yeah it's, I think it's gonna become a thing. And I've seen more and more of it, and it makes sense, like back to your, people should focus on what we do. We're early investors. We're not like investors should be deciding on, some company with a billion dollars revenue of whether to hold or sell very late.
I think we want to do what we do best and we, again, we don't, we wanna get money back to LPs.
Jason Jacobs: Hadley for any of the founders listening to the show what has you excited? Is there, if someone's working on x get in touch or who how, who do you wanna hear from?
Hadley Harris: Sure, yeah. Any any talented founder? I think a lot of our time is on what I talked about, these kind of vertical AI first solutions, especially, you have a long-term vision to for that second act. But, I'm also spending time. We had, we haven't done much in consumer for a while, but I do feel like now is the time to build a, an AI first consumer company and ended up making two investments last year that were consumer.
They were founder first and folks that I had either worked with before, just was really impressed by the team. But yeah, that opened to that as well. So yeah, I'm easy to find on Twitter X, whatever you want to call it, at just at Hadley and LinkedIn just Hadley Harris yeah. Easy to find me.
Jason Jacobs: Anything I didn't ask that you wish I did, or any parting words? I.
Hadley Harris: No, I alluded to this. I think we're entering just the most exciting time for startups that I've ever seen. And I've been doing this for a little while. So I think if you are considering starting something, but. You need a little bit of a nudge, like I'd say do it. There's never gonna be a better time.
I think there's a good chance that we're at a pretty unique point in history to start something new just do it.
Jason Jacobs: Quick time check. Do I have a few minutes to give you a recorded idea to get some feedback on to include in the episode?
Hadley Harris: Yeah.
Jason Jacobs: Okay. One of the areas I've been looking at it, as I was the Runkeeper founder and CEO and and I pretty traumatized after pushing that boulder up a mountain for almost a decade.
Landed the plane, had a good outcome had enough time away that I forget how much it sucked. And fit fitness and sports is just such a big part of my life. It's a big part of my life as as a participant. It's a big part of my life now as a dad with my kids stuff.
And so I'm, I've just been paying a lot of attention to it without any. Professional hat on, but then I can't help but notice that that AI is making a lot of new things possible as it relates to f for example my, my son has a a, a former player who played the game at a very high level who co coaches a U 18 team that's very high level.
And then on the side just works with some kids. And one of the ways he works with kids is he pulls clips from their last game. He does a little writeup, and he walks through the game with them areas they can improve things they did well et cetera. Has hundreds of these write-ups across across dozens of clients.
And so if you took those and you trained a model, could get AI to do what he does. So that's one idea. Another idea is, look at there's AI tools popping up for pickleball, for golf, for fencing, for dancing, for figure skating for right. And so it's I bet if you stood up this infrastructure in a lab like setting.
And you just had a sports focus, you could probably find some categories over time where you could take advantage of this stuff, computer vision, machine learning et cetera. And you could, build a portfolio of these sports where you get into a rhythm of a subject matter expert in each area.
But then a lot of the infrastructure and team under the hood could carry over from sport to sport. And, don't build a million of 'em, but pick a few, do 'em really well. Build a beloved brand with a cult following and make a nice living, with or without investment, preferably without to start, but maybe investment down the road if once it's proven out and baked and you're ready to scale.
And to your point, the second and third acts like, you could, in the hockey example, you could start, acquiring or building mini rinks and put cameras in 'em and be really tech forward and use AI for scheduling and for analysis and right. And so there's a lot of things you could do directionally beyond this entry point, but that's the entry point that I'm considering.
Anyways, love your thoughts.
Hadley Harris: Yeah, I think it's interesting. Would it be mostly is the kind of connected thing there coaching or giving athletes or aspiring athletes feedback and helping 'em be better or, because there's also kinda like a highlights aspect to this. Nahal and I always talk about, we play tennis.
Like I, man, I wish we had the highlights from today because there's we actually did something good for once.
Jason Jacobs: Yeah, I don't know yet. There are companies that are doing all of those things. But like one and then there's another question of who are you targeting? Are you targeting the serious competitive people, the teams and coaches and elite or, universities or, youth sports clubs or are you even just targeting like the casual enthusiasts?
And with Runkeeper, for example, we try to thread the needle between, it's like the people that were serious enough that they wanted something but not serious enough to get the $300 dedicated device. And if you take the golf example. Topgolf is a good example because is Topgolf entertainment or is it golf instruction?
It's you practice, you use your real clubs, you get better at golf. But there's this whole rich experience around it that attracts a lot of people that aren't serious golfers. And and that's what I, that's my, and I haven't done a deep dive, but what I'm seeing in the coaching and analysis world is that there's a lot of noise, but like a lot of it's crappy, like side project or it's catered to the enthusiast where it's, like the kind of people that would keep a spreadsheet anyways even without, any type of tool or the PE or there's like humans and, a marketplace, but it costs, a hundred or 200 bucks a lesson kind of thing.
And it's could you open up that market if you made it a much more affordable price point and wrapped a rich experience around it with, some community, some competition, some game mechanics. You made it really fun. Almost like a virtual top call style. Yeah.
Hadley Harris: yeah. I think there's something there. The yeah the part to figure out where I, where there may be friction is just around like the interactions and creating, capturing the data. I don't know, you probably use your phone, but like in get, getting the right interactions to do that.
But like at a high level, when I think a consumer just having, just starting to think about this for the first time in a while, there's a lot of stuff. It's things that rich people do that you can now expose to the rest of the world. Uber's like a classic example of this. I think a, I think rich people generally hire like personal coaches for their kids, and shouldn't everyone have that ability? And it could just be 9 99 a month instead of, ungod ungodly amount. I imagine that it is to get a great coach and it could be trained based on, you could have the personalities of messy or something helping you, with soccer.
You could royalties around his likeness or whatever. So yeah, it feels like there's something there.
Jason Jacobs: Yeah. And the, by the way, it's not a pitch because I don't even, I haven't narrowed it down at all. The only point I've gotten to is okay, you know what, just take this market like with a wide lens and I'm, let me take a few weeks and put some blinders on and just go and just take into it. And so actually a bunch of the people that are innovating in this area, I'm gonna have on the show.
And I'm being very clear that I'm considering doing something here. I'm not like trying to hide anything.
Hadley Harris: Given your background, you're, there's a great founder market fit, so yeah, keep me in the loop.
Jason Jacobs: That's the biggest thing that, it's like is it fit? 'cause I heard some people say I just don't think anything in that category is gonna be venture scale. I'm like, those people may be right. But that's not what's driving me. It doesn't necessarily need to be venture scale, like the founder market fit is the thing that excites me the most is that's the part I have the most conviction about is that I love the category.
is it, is it gonna be hard? Is it viable? Is it like, I don't know, but just as a starting point, I love the category and there's, there could be interesting possibilities at this intersection. And let me just, pull threads and spend some time in it and see what comes out the other side.
Hadley Harris: For what it's worth, you sound very similar to some founders that I've worked with prior, that I've back repeat like recently again, or as a team have backed again, where they were, had this kind of idea and it was like, yeah, I just, I'm interested in this, and it's sounds cool. Here's, and then.
Some of 'em never come back, but a couple have come back and be like, actually this could be a really big business. Like I, I spent, a after noodling on it for a couple months and investigating. So you may find the same thing it's, you're doing it for the right reasons but it actually may be a big business.
Like why don't you uncover it?
Jason Jacobs: Yeah, and the mistake I made once before is I had a discussion like this with a, with a VC who I had known a long time and had deep respect for and had never worked with and always wanted to, and he felt the same and he was like. Just take the money. It's an expedition. It's, it's not a company.
I get it. And if you don't find anything you like in six months, just give it back. And I think there is that what I had was a trend and a wave, similar to ai, right? But what I didn't have was the category to anchor in that I loved. And so what ended up happening is I stood up the infrastructure, got the band back together, started experimenting in different areas, but the air.
But then I had the monkey on my back of having three VCs on the cap table, only a little bit of money, but it, and they weren't pressuring me, but it just, it was like, it better look big and it messed with me. And then it pushed me down a path of the things that looked big enough for things I just didn't care about at all.
And then I felt trapped. And then I gave, I still had 90% of the I just gave it back. So if you said, for example, Hey, let's go on an expedition. I would say, you know what? Let me take, let me go and like really make sure not just that this is a fun area experiment 'cause I know it is right.
And yeah, something awesome might be possible to come out the other side, but let me make sure that the thing that is possible that might come out the other side is the thing that I'm obsessed with and will ride the ups and downs over the decade plus. And that's the part I'm just like, I don't want another false start.
So yeah.
Hadley Harris: No I mean it's 99% of people don't realize that. But having done it before, it's good that you do and totally agree with all that.
Jason Jacobs: The benefit or the curse of age is that you know where all the bodies are buried. So Hadley, thank you for coming on. This was awesome. I really enjoyed it. I'm glad to now have a dialogue with you. I will keep you posted on my sports idea and yeah, what you're doing is great and wish you every success.
Hadley Harris: Thanks so much for having me it's been awesome.
Jason Jacobs: Thank you for tuning into The Next Next. If you enjoyed it, you can subscribe from your favorite podcast player in addition to the podcast. Which typically publishes weekly. There's also a weekly newsletter on Substack at the next next.substack.com. That's essentially for weekly accountability of the ground I'm covering, areas I'm tackling next, and where I could use some help as well.
And it's a great area to foster discussion and dialogue around the topics that we cover on the show. Thanks for tuning in. See you next week.