Lessons from Sarah Guo

Sarah Guo, a prominent figure in the venture capital world and the founder of Conviction, has consistently shared her sharp insights on artificial intelligence, the art of company building, and the future of technology. Her experience as a General Partner at Greylock and now at the helm of her own AI-focused firm has provided her with a unique vantage point.

On Artificial Intelligence: The New Frontier

On the transformative power of AI: "AI is the biggest value creation opportunity in our lifetimes. I'm quite confident that we're going to have 10 and 20 person teams building billion dollar businesses." [1]
The long road to AI integration: "I think we're going to have like a 20 year plus ingestion period [for AI] even as a capabilities keep expanding." [2]
The gap between lab and reality: When asked if the gap between what AI can do in labs and what it does in the world will keep getting bigger, Guo's response is a simple, "I think that's true, yeah." [2]
The "last mile" of AI is the startup opportunity: "I actually think that's like half the opportunity for startups... if you don't get it all the way to end user value... it doesn't matter what the technology was." [2]
On the commoditization of AI models: "I think these models are not... smooth in their capabilities globally... language and cultural knowledge regional differences matter a great deal." [2]
The future of AI applications: "These intelligent 'Software 3.0' companies will both need to be great software businesses in the traditional sense... and will also be something entirely alien." [3]
The evolution of building with AI: "If Software 1.0 was about human-written code, and Software 2.0 is about dataset labeling, Software 3.0 will be about manipulating foundation models." [3]
On the capital intensity of AI startups: "The thing that is really expensive... is I want to train a model from scratch that is very large." [1]
AI's impact on industries: "We are extremely early in the translation of powerful AI models to powerful products that transform industries." [4]
The importance of staying current in AI: "The ways in which you should manipulate the model to use your information to successfully do more and more sophisticated tasks is changing like every month… I do think that the skill within organizations that is very useful is like being up to date on the latest and greatest from a techniques perspective." [5]

On Startups and Founders: The Art of Building

The founder's mindset: "My (abnormal) adolescence forged my view of founders and startups – it gave me the deepest respect for the courage and resilience required to build an enduring company, the permanent expectation that everything is going to be hard, the pervasive sense of fear that it's just you and your small band of pirates against Goliath and the uncaring world at large." [3]
The founder's edge: "Your only advantages are speed, undeniably good product, a technical thesis, risk appetite, cleverness, the focus that comes from always being in wartime." [3]
On the importance of conviction: "Most venture firms are designed for optionality, not conviction. However, we do not believe in a one-size-fits-all approach to venture investing." [3]
What she looks for in founders: "I'm looking for entrepreneurs that I think can be great. I think many of those entrepreneurs are going to be women and people of color." [6]
The value of focus: "I really wanted to focus on early stage investing 0ero to1 is just magic." [1]
On leaving a secure path: "It's a great job being a GP at a big VC firm it's crazy to leave But I wanted to operate differently i had a few ideas for how a small team could do venture." [1]
The reality of entrepreneurship: "I remember about the number of times we all thought the company wasn't going to make it." [3]
The importance of a unique perspective: "I think it just helps to have a very ambitious roadmap... One thing that strikes me every time I talk to people who are building product in conjunction with the research teams at the labs... they just assume that they're going to be able to do everything eventually."
On product-market fit: "If it's not glaringly obvious your company has product-market fit yet, with customers pulling the product from you, it very likely doesn't."
Undervalued traits in startup executives: "Two hugely undervalued attributes of startup execs - a problem-solving attitude and a lack of fear."
The power of rapid onboarding: "Rapid onboarding of new talent is a competitive advantage for startups."
The democratization of B2B tech: "One of the trends I'm most excited about is the democratization of b2b technology."
The pressure of fundraising: "The more capital you raise and spend, the more the next set of investors expect. People look at progress / 💵."
On navigating tough times: "A sunny side of all this for startups? It's suddenly crystal clear whether your product is something people see immediate value in. No more Mrs. Nice Customer."
The importance of founder resilience: "Small teams with a better product idea, great execution, and a great deal of persistence can win against huge vendors and bring something better to the world." [7]

On Venture Capital and Investing: A Disciplined Approach

The essence of her new firm: "Conviction is purpose-built to serve 'Software 3.0' companies, and to help them achieve their potential as the most important companies of tomorrow." [3]
A focused investment strategy: "We've raised a $100M first fund to back extraordinary founders building these enduring companies." [3]
The investor's role: "Our goal is to help the founders we work with become their most ambitious selves." [4]
On the specialization of VC: "I think in the near term it's more specialized... I think founders in this field in particular they want investors who know something about these strategic issues for them." [1]
The discipline of a smaller fund: "If I believe constraints breed discipline and creativity for founders. like they also do for investors." [1]
Her investment thesis: "I am fundamentally an early stage investor. so I think that the people who choose to build companies in this macro. they they really believe right they're committed to taking the risk." [6]
The human element of VC: "I don't know artisal. personal inefficient is just meeting with people right and seeing if uh seeing if we can see greatness in them and so I just spent a lot of time in person." [6]
The diversity of successful investors: "I have had the uh privilege of working with some really extraordinary investors at Greylock. and what I've learned is they're they're all different right." [6]
Key traits for early-stage VCs: "The Important traits she seeks are core technology understanding, judgment, and business insight, with judgment being the most difficult to assess among early-career talent." [8]
The importance of not panicking: "I value a lot in investors. and in partners around company building is not panicking. this sounds like an incredibly basic thing but like many bad things happen along every great company journey." [9]
On evaluating opportunities: "You don't just turn away from all problems because like the space has traditionally been hard. but it should like it should educate you as to like does the founder recognize that and can they navigate out are they doing something to uniquely break through."
Her biggest investing mistake: "My biggest mistake was investing. um in emerging markets. um I I looked at companies on paper. and purely evaluated them on the paper business."
The core of a VC firm: "I was pumped to chat this week with Sarah Guo. Sarah is a startup investor and the founder of Conviction, an investment firm purpose-built to serve intelligent software, or 'Software 3.0' companies."
The value of a network: "We have a wide and deep network that we put to work in service of our portfolio companies." [4]
On taking risks: "You can't rationalize that right it's a great job being a GP at a big VC firm it's crazy to leave." [1]

On the Broader Tech Landscape and the Future

On the pace of innovation: "Innovation happens inexorably, but at uneven speeds. After years of nothing foundationally new happening (outside of crypto) we are at a special moment in technology history." [3]
The changing nature of work: "I think it's really difficult ult to overstate. the change in um how companies are organized. and like you know to use the buzz word the future of work."
On cybersecurity: "When people build internet products without assuming there will be adversarial actors I just send them this photo." [10]
The need for more diversity in venture: "The venture industry could use a little more curiosity, a little more punk, and a lot more diversity." [10]
On a potential economic downturn: "I think it's very easy to look at the macro. and say you know it's a scary time it's a risky time how much capital is available to funds or startups. we're in a huge time of transition. so I think it's actually a huge. opportunity." [6]
The explosion of software: "There is an explosion of software happening today, and I believe we are relatively early in the current generation of software innovation." [7]
The shift to the cloud and mobile: "We spent a decade um reaping the benefits of a shift. to um the cloud and to mobile for consumer. and so a lot of people think we're kind of end of cycle."
On the next wave of infrastructure: "I will mention two different companies that we invest in that ride on the next generation infrastructure of trends, which I think of as a change in architecture." [7]
The importance of being customer-centric in enterprise: "To succeed in the enterprise side, you have to be extremely customer-centric so that you can build a product that is good for the customer and end-user to begin with." [7]
A final piece of advice for founders: "Don't raise money just because it's the default. Raise to empower and accelerate your mission."

Learn more:

Lessons from Sarah Guo

On Artificial Intelligence: The New Frontier

On Startups and Founders: The Art of Building

On Venture Capital and Investing: A Disciplined Approach

On the Broader Tech Landscape and the Future

Written by Antoine Buteau

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