Our Investment in Tribe.ai
This week, TechCrunch covered the funding announcement for one of our recent investments, Tribe.ai. The company describes itself as:
“An AI-native services company that helps Enterprises build best in class AI products. Our team is augmented by a talent network of over 500 top AI engineers from places like Google, Tesla, Meta and OpenAI who bring both industry and deep technical specialization to our project deployments.”
Tribe has a uniquely indie story. They’ve bootstrapped their business for the last 5 years. They’d been methodically racking up partnerships with cloud infrastructure providers and foundation model players. They’d built a very good business.
Then ChatGPT launched. And everything changed.
Overnight, companies needed an AI strategy, and they needed it yesterday. The problem? They didn’t have the talent, expertise, or even understanding to know how and where to build, let alone what. Around this time, we got connected to the cofounders of Tribe, Jaclyn Rice-Nelsonand Noah Gale.
Increasingly, Tribe is becoming the go-to partner to help these companies navigate the technology and business model opportunities that come with delivering the power of AI solutions to their customers.
I recently sat down with Jackie to unpack the current commercial state of AI, their decision to raise funding, and so much more.
Some takeaways:
— There’s a significant gap between the hype around AI and its actual implementation in businesses. Many companies are still in the experimental phase, with few AI solutions in production. The main barriers to AI adoptions are technical challenges, cost considerations, and lack of expertise. We’re still very early in realizing AI’s promise.
— AI adoption was slow, then immediate. In a pre-ChatGPT world, the focus was on convincing companies to care about data science and machine learning. Post-ChatGPT, there’s been an explosion in demand, with companies actively seeking AI solutions.
— Most companies are still in the proof-of-concept stage. There’re limited production-ready AI use cases, which hinders adoption. But with major cloud providers (Microsoft, Amazon, Google) aggressively pursuing AI strategies, that’s bound to change. There’s constant evolution in model performance and capabilities. Companies need to view AI as a continuous investment, similar to cloud infrastructure, rather than a one-time project.
— Tribe’s approach to AI implementation is what made it such an interesting investment for indie. Their focus on education to help companies understand AI’s potential, and emphasis on quick, cost-effective proof of concepts to demonstrate value, means they’re positioned to continue rapidly growing. As a services business, they’re able to help companies balance cost with value creation, navigate rapidly evolving AI technologies, and future-proofing AI investments.
When we made the Tribe investment a few months ago, I got a lot of blank stares from my fellow investors — you invested in a services company?
Since then, I’m increasingly seeing investors wrestle with the interplay between services and software:
Once seen as unscalable, low-margin businesses, we now have a number of examples of high-growth companies, such as Palantir or Crowdstrike, who leveraged services to get close to customers to inform their product roadmap. Tribe is following a similar path, which we think is a winning one for this next wave of AI-driven software.
In the previous Software as a Service world, the software was the service, consistently available on-demand. With the increasing competition and commodification we see as part of this AI wave, the software will constantly be adapting to ever-evolving needs and use cases of enterprises. Selling software seats alone will not be the differentiator or the ultimate winner. Being close to customers will be critical.
We cheekily say that this AI-drive evolution introduces the age of Software AND a Service. We believe Tribe can be the category leader for this new wave of SAaS, and we’re already seeing signs they’re well on their way with an eight-figure revenue run rate (more than doubling this year) and a number of Fortune 20 customers already in development. We couldn’t be more thrilled to be in business with them.
I hope you enjoy listening to this conversation with Jackie as much as we enjoyed recording it.
— Bryce
