Why will Amnesty International eat McKinsey – but not today

Navin Chaddha, Managing Director of Mayfield, is betting on the ability of Amnesty International to transform heavy industries such as consulting, law and accounting. The veteran investor, whose victories include Lyft, Poshmark and Hashicorp, recently discussed in Techcrunch’s Strictlyvc in the evening in Minlo Park Why does he think that his “artificial intelligence teams” can create margins similar to programs in sectors that intensify traditional work, and why emerging companies should target neglected markets instead of competing face to face with giants such as Accene-although it admits that disrupting commercial services where human relations and confidence are sometimes more than Silicon Valley. This conversation was gently edited for length and clarity.

You believe that law firms, consulting companies, accounting services-combined a market worth $ 5 trillion-will be fully re-imagined by the first companies that work with software similar to programs. Proof of that. What did you see behind PowerPoint performances?

I think the company’s feature that has been operating for more than 50 years is that it has seen all directions, from central computers to small computers to computers, to the Internet, to mobile devices, cloud, social and now this era of artificial intelligence. The example that I will present is in the late 1990s, this concept of electronic works came, which is: If you are a physical work, I cannot survive if you are only from bricks and mortars; I need clicking and mortar shells. Then the use of external sources became a trend, and the lead outside became a great direction. You cannot build a software services company without being in India or an emerging market. The same happened with supply and manufacturing chains – China and Taiwan Rose. So what is this new age with artificial intelligence? It is clear that artificial intelligence is the power of 100x, and AI cooperates with humans, and we hope it will make them better. And I think that is the case, and it will help re -perceive business.

A lot of frequent tasks will be performed by AI … and there will be models. One is that you grow organically. The second is that you grow invalidated. . .

Can you give a specific example of how to do this?

What types of things can LLM or AI do? Well, say I should implement Salesforce. Who wants to do this? The person will come and say, “I am the manager of your agent. You have to implement Salesforce. It is the same group of things. Use Amnesty International as a hole to do so, and whatever Amnesty International cannot do, the human being is in the episode.

Now, suddenly, if you start doing these types of things, you can do less by humans and more work that artificial intelligence has done, and (customers) only pay for artificial intelligence when they use it (they use it.

The market (entry) should not be the match (large consulting companies and information technology companies) such as Accenture, Infosys or TCS. Go after the neglected fans. There are 30 million small companies in the United States, and 100 million worldwide cannot afford the costs of knowledge workers. Providing them as a program. They say, “I need a receptionist. I need to schedule. I need someone to build my website …” You don’t compete with the world’s dialects. Featured markets, as instead of charging per hour, instead of charging monthly for the contractor, you receive fees for each event.

So the results are based on the results instead of the time -based bills.

This is the result, yes. . . Cloud bills like that; Electricity is like this. . . If Amnesty International is 80 % of the work, it can have a total margin from 80 % to 90 %. Humans still have a 30 % margin to 40 %. You can have margins mixed from 60 % to 70 % and produce 20 % to 30 % net income. And believe me, most services companies earn money. Technology companies no. They live on adventure funds and then public market money.

I just led the series A to a company called Gruve A few weeks ago. It is an emerging technology consultant company. What did you see in its first pilots?

I think this is where an inorganic and organic mixture occurs. (Gruve was established by) very successful founders who created two services before (and) obtained, and they received revenues of $ 500 million each, and 50 to 100 million dollars of profits. They started this time and said: “What do we know? All growth from this point onwards will happen through artificial intelligence. “He grew ($ 5 million in revenue) (one million dollars) in six months. Why do I pay the price of all these security persons?” If you were through the use of external sources, the seller was traditionally imposed on $ 10,000 a month. If you are hacked, if there is an event, if you look at it, then you pay me. “

Can’t companies like MCKINSEY buy these capabilities AI? They have large companies they do not want to lose.

Yes, I think what will happen is where the innovative dilemma comes. When the institutions software companies, which were permanent license companies, witnessed the start -up companies, which they did not want to adopt (the form) because (Saas companies) earn a monthly instead of five years at the forefront. Institutional companies also collected 20 % maintenance fees. It was difficult (for them) to go out of this medicine and say, “Oh, I will impose you monthly.” The innovation of the business model was the main thing. They did not. So, MCKINSEY and Accenture, with a lot of dislocation, will be busy serving their customers (that is why I advise the founders) depend on the neglected masses. Discover a unique strategy to go to the market and serve a person (the market can descend).

But they will be re -conceived as well. So these small companies, which do not compete with them today, distinguish my words: within 10 years, you will compete with them. And those major companies – MCKINSEY, BCG, Accenture, TCS, Infosys – all have an innovative dilemma (and asks themselves): When do I do that? (When do I switch to the results -based artificial intelligence model?) Because as a public company, revenues of revenue that can be predicted to the revenue based on facilities will decrease.

You are a sculpture 100 million dollars From your recent money to allocate his “teammates in the team” Amnesty International “last fall. What makes the AI ​​team teammate for the artificial intelligence tool?

There are a lot of tuning words in the industry. First, that was Copilots, then artificial intelligence tools, artificial intelligence agents, and artificial intelligence colleagues. So the Mayfield thesis is that his teammate is a digital companion who cooperates with man on common goals and gets better results. Technology that may be built can be techniques or coilots. One of the manifestations of this is, “I am a fellow in the human resources team. I am a colleague of the sales engineering team.” The goal is not to replace it; The goal is to cooperate and cooperate together.

When people started talking about his teammates and assistants, it seemed a novel, but I wonder whether this would look harsh while inspecting more people their jobs. Does Silicon Valley have? Marketing problem?

Quite right, and I think we do not need lack of sugar. We need to treat it face to face. . . Yes, there will be work displacement, but humans are smart. They are the knight. Horse here is Amnesty International. We will re -imagine ourselves. We will invent ourselves. Today, the focus focuses on reducing costs, but we will discover how to expand our markets, and how to increase revenues. This happens with each technical wave that comes. When Microsoft Word reached the desktop computers, people believed that (executives) were out of work. Then came Excel, and the accountants who made accounts – everyone thought they were others. We saw the same thing with Uber and Lyft. People thought that taxi drivers would disappear. But what happened instead? The markets expanded.

My thesis is the way emerging markets such as India, China and Africa did not have ground lines – they could not dig copper, so they went wirelessly, cellular – this will happen with many markets. Artificial intelligence will work as humans are not even available to serve this customer. So, in the long run, I am very optimistic. In the short term, there will be pain, but no pain, no gain.

Talking about coding, it was announced recently “The Tarshi Vepi deal is centered on an Israeli company that has just reached 250,000 users per month and 200,000 dollars in monthly revenues. It was purchased by another Israeli company, WIX, for 80 million dollars in cash. Is this mathematics logical to you?

In fact, these days, there are no logical mathematics. We are in the era of artificial intelligence. You don’t know what will happen. I am surprised that with $ 2.4 million of (repeated annual) revenues, which only sold it for $ 80 million. I thought it would be $ 800 million, right? (Laughing.) In today’s world, you don’t know. It is a market.

How to invest in this market?

This is where the secret recipe comes from people installed on their stability. They broke the symbol. It is not a science. It is an art. It is like 10,000 hours (the rule): the more it is, the better. And companies that have been 50 or 60 years ago – we have seen all kinds of bubbles.

The number one rule is, you have your North Star. You have discipline and they have no fomo, because Fomo is for sheep. If you have these two or three things, your own strategy and no fear, (will do well). Just remember one thing: for people (in this audience) who are VCS, we are in the field of money management. We are not about collecting slogans. We are about to take small sums of money and make them larger.

During this part (of the course), a lot of money will be earned. But I think 80 % of people will lose money. They do not know what to do.