Jeremy Kaufmann: The AI Investments Silicon Valley Is Missing

Jeremy Kaufmann (0:10)

And look, I was 22 years old, so everyone is shouting at you as you walk into the Fed, and I'm like, I'm, you know, sharing a room in New York City with two or three people that are making about six times more than I am. So I did not consider myself to be the one percent offender there.

Scott McGrew (0:32)

For years, Silicon Valley investors wanted nothing to do with hardware. Software was the future.

But Scale Venture Partners Jeremy Kaufmann is investing in companies that combine artificial intelligence and hardware. One of his bets is a company creating intelligence sensors to help the elderly. Kaufmann actually passed on an earlier opportunity to invest. He'll tell us what he missed. I'm Scott McGrew. Welcome to Sand Hill Road.

SPEAKER_3 (1:04)

Does checking your bank statements feel like digging through a dusty attic full of forgotten subscriptions and old free trials?

Experian can help take the pain out of canceling by handling it for you. Think of it as Operation Get Your Sanity Back. Over 200 subscriptions are cancelable. So get started in the Experian app and see how much you could save.

Scott McGrew (1:34)

You invested in a company that in very simple terms puts intelligence sensors in the rooms of elderly people. Just closed a $70 million Series C with you participating about a week before this interview.

You weren't there for the Series A, and you have said you screwed up missing it. What did you miss the first time that you now know?

Jeremy Kaufmann (1:59)

That's a good question. And yeah, I mean, what I love about this category is it brings together a couple of interesting things. I mean, one, it's just such a personal area for many people. It's just a category that's been under invested in and touches all of our lives in so many ways.

People have parents or grandparents in these facilities. And what the device really does is that it helps detect or unsafe behavior. And why I think that's so interesting and so important is it just brings together a number of players in this ecosystem in ways that really matter. Every family wants their loved one to get the best care.

Everybody in the facility wants to make sure that the staff is paying attention to them. And then the facilities overall, they have an economic incentive to make sure that the residents are getting the best care, and the residents are staying in the care centers. And I think what other folks have maybe missed, and myself included at the Series A, was that there were a couple of different technologies coming together, the intelligent cameras, and then these new e-call systems. And I think what I missed at the A was just that this was the company that started a couple years after some of the other players in the space. And I think it's so interesting in this AI era that sometimes there's first mover advantage, and sometimes there's second or third mover advantage. And this was one of those times when there was actually a second or third mover advantage. The cost of the sensors had gone down, the technology had gotten a whole lot better since 2018 And I think in all this hardware enabled SaaS, there's this moment in time when the cost curve comes down and something that wasn't do-ably in an accurate way becomes do-able. And that moment is pure magic. And this was one of those cases.

Scott McGrew (3:46)

You mentioned cameras. As we, as technology changes so quickly, I think we have to kind of rethink our understanding of what things do.

It's a camera, but not in a camera way. And this is true of some other of your investments. Totally. But this one, it is not a camera looking at my mother or my grandmother 24 hours a day with a video screen.

Jeremy Kaufmann (4:10)

Yeah, there's certain privacy preserving aspects of it. I mean, people are very sensitive to their own privacy. I mean, to put a camera that can observe everything in someone's room is a hard sell. But what Inspiron does is that they basically can only detect unsafe behaviors, but they're not able to observe the totality of the footage.

And what's also important from a design perspective is that it doesn't look like a camera. I think people think that this device is going to look like a camera or look obtrusive, but it actually just fits right on the wall. It blends in. It looks like it's part of the typical room. And I think just the product design is quite clever, because in this business, the individual families, the individual residents need to opt in. Nobody is just going to do this if they don't want it. And what's so amazing about this business is that over 85 percent of the residents in these care facilities are opting in. And they're opting in because there's clear benefits, and they're opting in because it doesn't look like a camera.