Naveen Chafdha, Managing Director of 55 -year -old Silicon Valley Venture Firm, MefieldConsultation, law and accounting are putting a big bet on AI’s ability to change people-baron-industry industries. Experienced investors, who include Lyft, Poshamark and Hashicorp, recently discussed Techcrunch Strict evening in Menlo Park Why do they believe that “AI team partners” can traditionally create margins like software in labor-intensive fields, and why startups should still target neglected markets, but rather than to face the head-to-head with giants like Accenture-although they admitted that the outfits are obstructed where the relationship and the Trust Matter Matter is sometimes apprehensive. This conversation is lightly edited for length and clarity.
You feel that the law firm, counseling companies and accounting services-$ 5 trillion market-will be fully prepared by AI-first companies that work with software such as margins. prove it. What have you seen beyond PowerPoint presentations?
I think one of the advantage of a firm in business for more than 50 years is that it has seen all the trends, from mainframes to minicamputors to PC, internet to mobile, cloud, social and now from this AI era. The example I will give is in the late 90s, this concept of e-business came, which was: If I am a physical business, I cannot survive if I am just brick and mortar; I should click and Mortar. The outsourcing then became a trend, and offshoreing became a major tendency. You cannot build a software services company without one of the attendance or emerging markets in India. Supply chain and manufacturing – the same happened to China and Taiwan Rose. So what is this new era with AI? Obviously, AI is a 100x force, and AI is working closely with humans, hopefully to improve them. And I think it’s, and it’s going to help in reimagine business.
A lot of repetition works are to be done by AI … and there will be two models. One is that you grow systematically. The second is that you grow inorganically. , ,
Can you give a specific example how it will work?
What can LLM or AI do? Well, I say that I have to apply salesforce. Who wants to do that work? Human will come and say, ‘I am your customer manager. You have to apply salesforce. ‘This is only one set of things. Use AI as a horse to do this, and whatever cannot be done is human in the loop.
Now, suddenly, if you start doing these types of things, you can do less work done by humans and more work done by AI, and (customer) only pays for AI (they) when (they) use it.
And after the market (entry) (large counseling and IT companies) such as Accenture, Infosys or TCS should go. Go after neglected public. There are 30 million small companies in the US, and 100 million people worldwide cannot tolerate knowledge workers. Provide them as software. He says, “I need a receptionist. I need a scheduler. You do not compete with the pronunciation of the world. You go after fragmented markets, where instead of charging per hour, instead of charging per month for a contractor, you charge per event.
Hence the result-based pricing rather than time-based billing.
This result is based, yes. , , Cloud billing is like this; It is like electricity. , .I 80% of the work will be done by AI, it may have 80% to 90% GDP. Humans can still be 30% to 40% margin. You could mix the margin of 60% to 70% and produce 20% to 30% net income. And trust me, most service companies earn money. Not tech companies. Those enterprises live on money and then public market money.
You led Series A for a company called Gruve a few weeks ago. It is an AI Tech Consulting Startup. What did you see in its initial customer pilots?
I think this is the place where there is a combination of inorganic and organic. , He started this time and said, ‘What do we know? We know security. “So they acquired $ 5 million security consulting company (which provided managed security services). This point would lead to all the growth through AI.” And they ($ 5 million in revenue) to $ 15 (in revenue). Why am I paying all these security people? “If you outsource, (a seller is traditionally charged) $ 10,000 per month. If you get hacked, if there is an event, if I see it, you pay me.”
Can companies like McKinsey only buy these AI capabilities? They have found big businesses they do not want to lose.
Yes, I think what is going to happen, this is the place where the dilemma of the innovator comes. When enterprise software companies, which were always licensed companies, saw that mother -in -law companies were emerging, they did not want to adopt (model) because (mother -in -law) (mother -in -law) charge monthly companies instead of five years. Enterprise companies also collect 20% maintenance fee, It was difficult to get down from that medicine and to say “Oh, I will charge you monthly.” Business model innovation was important. He did not do so. So McCinse and Extense, with so much chaos, they are busy serving their customers (that’s why I advise the founders) after the neglected public. Find out a unique Go-to-Market Strategy and serve someone who cannot come to the market to serve an accident).
But they are also going to get again. So these small companies, who are not competing with them today, mark my words: In 10 years, they will compete with them. And those big companies – McKins’, BCG, Accenture, TCS, Infosys – all have an innovator dilemma (and asking myself): When do I do it? (When I switch to a result-based AI model?) Because as a public company, my revenue is going down from the forecast revenue to the utility-based revenue.
You carved $ 100 million Final decline to dedicate the “AI team colleagues” from its recently raised funds. Does a true AI Teammate vs. AI tool create?
There are lots of buzzwords in the industry. First it was a partner of Copilots, then AI Equipment, AI Agent, AI team. So the Mefield thesis is that an AI team partner is a digital partner who collaborated with a human on shared goals and achieves better results. The technique on which it can be made can be agentic technologies or copilot. Its expression is, “I am an HR teammate. I am a sales engineering team partner.” The objective is not to replace; The objective is to form a team together and cooperate.
When people started talking about the teammates and assistants of the team, it seemed to be a novel, but I wonder if it is going to look as more people because more people lose their jobs. Is there a marketing problem in Silicon Valley?
Absolutely right, and I think we need not to sugarcane. We need to address this to the head-on. , .Yes, there is going to be a job displacement, but humans are smart. He is a jockey. The horse here is Ai. We will re -prepare ourselves. We will strengthen ourselves. Today, attention is on cost cuts, but we will find out how to expand our markets, how to increase revenue. It comes with every technology wave that comes. When Microsoft Word came to PCS on desktop, people thought (executive assistants) were out of business. Then came Excel, and the calculating accountant – all thought they were out of business. We saw the same with Uber and Lift. People thought that the taxi driver would go away. But what happened instead? The markets expanded.
My thesis is, the way emerging markets like India, China and Africa were never landline – you could never dig up copper, so they are going to be wireless, cellular – this is going to happen with many markets. AI will work where humans are also not available to serve the customer. So, for a long time, I am very, very fast. In short-run, there will be pain, but no pain, no benefit.
Talking about coding, recently announced ,Vibi-Coding “The deal was focused on a six-month Israeli company, which reached $ 200,000 per month in 250,000 users and monthly revenue. It was bought by another Israeli company, Vicks, which was in $ 80 million in cash. Does this mathematics understand for you?
Actually, these days, no mathematics is understood. We are in the AI era. You don’t know what is going to happen. I am surprised that they were sold in only $ 80 million with $ 2.4 million (annual recurring) revenue. I thought it would be $ 800 million, right? (Laughing.) In today’s world, you do not know. This is a market.
How do you invest in that market?
It is from here that the secret recipe comes from those who are proved. They have cracked the code. This is not science; This is an art. It is like a 10,000-hour (rule): the more you practice it, the better. And the firms that are from about 50 or 60 years – we have seen all kinds of bubbles.
Number-is a rule, you have your own North Star. There is discipline and there is no fomo, because FOMO is for sheep. And if you have those two or three things, then your own strategy and no fear, (you will do well). Just remember one thing: For people (in this audience) who are VCs, we are in money management business. We are not about collecting people. We are about taking small amounts of money and making them big.
During this part (cycle), a lot of money will be made. But I think 80% of people are going to lose money. They do not know what they are doing.
