Jeff Horing on value capture
From AI Investment: What Makes This Time Different? Hani Enaya, Brad Gerstner, Jeff Horing, Umesh Sachdev · · FIIInstitute
“I think there are two obvious winners: the infrastructure players and the customers — it gets trickier when you look at the moats of earlier companies; I would not be surprised if the majority of value capture is with the incumbents, the established players who add this feature set, though the startup community will still do very well.”
On , Jeff Horing, Co-Founder & Managing Director at Insight Partners, spoke about value capture during AI Investment: What Makes This Time Different? Hani Enaya, Brad Gerstner, Jeff Horing, Umesh Sachdev on FIIInstitute.
About Jeff Horing
At the Future Investment Initiative in October 2023, Jeff Horing discussed the state of AI investment. He stated that the primitives of AI are data and compute, and argued that enterprises need their data in the cloud to fully leverage it, which he said has driven growth for hyperscalers and data platforms like Snowflake and Databricks. Horing noted that Insight Partners is a large shareholder of Nvidia and said the company's data center revenue growth was underestimated because AI adoption is occurring faster than forecast. He added that companies in competitive industries risk being left behind if they do not use AI for tasks such as code generation or sales center transformation. Horing identified infrastructure players and customers as the two obvious winners in AI, and said he would not be surprised if the majority of value capture goes to established incumbents that add AI features, though he said startups will still perform well. He described an initiative at Insight Partners to create 10% productivity gains across operational functions in its software companies over the next 24 months. Horing also observed that AI-native businesses face different unit economics than traditional SaaS, because significant compute costs change gross margins and cost of goods sold. He stated that the financial benefits enterprises are seeing from AI are so profound that they will drive adoption at an unusual pace, and that even if hype cycles or bumps occur, the incentives of large listed companies will keep the cycle moving forward.