The AI-Native Services Playbook - with Jake Saper, General Partner - Emergence Capital

**Ray Rike** (0:08)
Welcome to today's episode of the AI to ROI podcast. Today, I am joined by Jake Saper, General Partner at Emergence Capital. We'll be discussing five topics today based upon the Emergence Capital's AI Native Services Playbook. First, why product leadership is so critical early on.
Second, the mirage that is product market fit.
Third, why outcome-based pricing is so important in an AI Native Services model. Fourth, revenue per employee is a defining metric. Then fifth, the North Star metric. Jake, could you take a moment to give a brief overview of your journey to becoming a guest here on the AI to ROI podcast?

**Jake Saper** (0:51)
Thanks for having me, Ray. My journey to coming here. I'll start with my journey to Emergence, which I guess brought me to this podcast. I was born in Austin, Texas, or I was raised in Austin, Texas.
My parents are co-founders, they've started a bunch of companies together. So I have inadvertently been sitting shotgun on the early stage startup journey since I was a child.
When I was in middle and high school, my parents would bring strategic questions about the business to the kitchen table and we would debate. They should enter this market and how they should think about this new product and pricing. So I've been doing versions of this job unknowingly since I was a child. I'm very grateful to my parents for that.
After college, I did consulting. I'm a very structured thinker. I like frameworks a lot, so consulting was a very good place for me to hone those skills. Then I did a startup, which I had to do because of my parents and where I was raised. My startup was developing utility-scale solar power plants in India and Africa. So a very intense experience. I was living in Mumbai and building very large power plants and selling the power to governments, which was a wild, crazy, horrible, terrible, wonderful experience, like all startups, plus living in Mumbai and selling to these bureaucrats as my customers.
But that journey ended for me in about 2012 And then I came to America for grad school. And I did an MBA and an MS in environmental sciences at Stanford. That's just where I got to venture. Started working at Kleiner Perkins in their green growth fund. Decided I really liked investing. I didn't love the growth equity later stage version of it that I was doing there. I was more interested in doing the kind of stuff I did with my parents, which is like earlier stage kind of series A, seed stage, series B type questions you tackle. And I joined Emergence in 2014 And I've had an incredible amount of luck and fortune since I've been here. The very first deal I was able to lead diligence on was our investment in Zoom in 2014, which was an amazing life changing experience for me and for so many people. And I just feel a lot of gratitude. So it's been 12 years. I feel grateful to do this job, to work with my partners and to have this conversation with you.

**Ray Rike** (3:01)
Well, you are in the perfect seat to be on the early stages of AI, and specifically AI-Native Services, professional services. And when I saw the playbook that you and Emergence published, I knew I need to have you on the podcast. But in the first three paragraphs, something jumped out at me and I'm not a gotcha type podcaster, but something jumped out at me that I want you to share with our audience. And that is, you talked about how critical deep domain experience is for an AI-Native Services company makes total sense to me.
But then you also said it doesn't necessarily need to come from the founders. Can you expand upon that?

**Jake Saper** (3:40)
For sure. And maybe I'll take one step back before we dive into that, just define what an AI-Native Services is and then explain why domain expertise is important and I'll explain why it doesn't have to come from the founders. So an AI-Native Service is a vendor that delivers an outcome. And they do it generally with some combination of AI with a human wrapper on top. So this looks like an AI-Native Accounting Firm, an AI-Native Insurance Broker, someone that is delivering a service but doing so primarily with AI.
The reason why domain expertise is so important in this era or in this business model is that in this business model, in contrast to SaaS, you are not selling a product. You are selling yourself and or sell your own ability to deliver an outcome. So when you are talking to a potential customer, you're not saying, hey, try my product and see if you like it. You're saying, hey, trust me to deliver on your insurance brokerage, on your fund accounting, on your etc. So you need the credibility on your team to say like, yes, I am someone that can be trusted and I've got AI supporting that below.