Evolution or extinction ☄️

Hi friends,

Flybridge no longer sees AI as one investment area, but as our central focus. We firmly believe entrepreneurs will shape an AI-driven future across every industry.

In the second installment of this five-part series, I will break down the second tenet of Flybridge’s Third Wave Thesis. Follow along, share your perspectives, and let me know what founders you’ve found building an AI-powered future.

Part Two: AI Native Horizontal Applications

Horizontal software with embedded AI has major potential over the next 10 years. Instead of customizing for certain industries, these companies offer capabilities useful across sectors. By applying intelligent data analysis to common functions like sales, marketing, finance, HR, etc., AI software can disrupt markets long dominated by legacy vendors.

The benefits of AI - better decisions, efficient workflows, automated insights - need intelligence built into the software. For instance, AI can enhance key processes like sales forecasting, dynamic pricing, customer support prioritization, recruiting workflows, and other critical tasks exceeding human cognitive capacity.

Startups in these spaces now provide solutions that analyze huge datasets with advanced machine learning, exceeding traditional human methods. An AI recruiting platform can incorporate insights no individual human can replicate. Customer engagement powered by real-time data blows traditional marketing away. AI scheduling and processing reduce risk and paperwork.

As AI capabilities become standard, enabled by accessible developer platforms, incumbents using outdated approaches risk extinction. The innovation AI drives across horizontal categories - more automation, better insights, decreased risk - substantially grows the total addressable market. Analysts predict over $3 trillion in horizontal SaaS revenue will move to AI-native apps in the next decade.

Startups unleashing AI's full power for key business processes include Brighthire (recruiting), MelodyArc (customer engagement), Tato (project management), and others. These companies embed intelligence natively into their offerings instead of adding AI to current products. This bottom-up model enables transforming entire workflows rather than just improving specific decisions.

Adoption challenges persist, as users need faith in AI for decision-making. Biased data and black-box models require safeguards. Still, AI-native apps that overcome these roadblocks can significantly disrupt incumbents and seize trillions ($) in TAM.

Until next time,

Jesse

Hot Links

📚 Jeff Bussgang has taught thousands of founders how to experiment their way to startup success at HBS. He’s sharing his methodology in a new book, The Experimentation Machine. Check it out, and apply to be an alpha reader!

🤖 Brighthire is an AI copilot for hiring. They’ve helped teams at Canva, Zapier, and Superhuman land exceptional talent. If you’d like an intro to their team, send me a quick email.

🚀 MongoDB for Startups offers free MongoDB Atlas credits, one-on-one technical advice, co-marketing opportunities, and access to their partner network. I’m happy to intro. Learn more.

💼 Brett Goldstein is hiring a full-stack engineer and an AI engineer for his next startup (stealth mode). Reply to this email if you or someone you know would be a great fit.

👋 Hi, I’m Jesse, a seed-stage VC at Flybridge. If you’re building or investing in an AI-driven future, reply to this email with 1-2 short paragraphs. I’d love to catch up over coffee.