Peter Berg of M12

Welcome to the Puck Venture Capital and Beyond, the show that examines the changing landscape of our world. We'll have candid conversations with VCs, entrepreneurs, and thought leaders grappling with our current challenges and providing solutions to key problems we face as a nation. I'm Jim Beer, president of CMBG Advisors. This podcast brings change makers to the table to discover the inner workings behind their decision making strategies and ultimately how they got to where they are today. The thing that I'm most passionate about is building a bridge between incumbents and larger organizations that have scale and resources and startups that are building the future.

And I think if you can actually take the strengths of both of those two entities and combine them, magic can actually happen. On today's episode of the Puck, I sit down with Peter Berg, managing partner at m twelve, the venture arm for Microsoft, where Berg leads enterprise SaaS investments, fintech, gaming, and more. We discussed his journey to Microsoft, his singular investment perspective in today's corporate world, and where the puck is going in the new age of AI. We've got a lot of exciting things to cover today, so let's get to it. Well, first, Peter Berg, welcome to the Puck.

We're excited to have you here. As we jump into this, can you take a minute and just tell us a little about your background? Yeah. Thank you so much for having me. I'm honored to be here.

Yeah. In terms of my background, so I I've actually spent most of my career on the operating side, but I guess I spent enough time now as an investor, both as an angel investor as well as a corporate VC. You can consider me an investor solidly in the investor camp as well as the operator camp. And I've been fortunate to hold a number of different operating roles over the years. I was actually just chatting with a friend about this.

It's not not always obvious how the dots connect looking forward, but I think looking back, like, the thread that weaves through them all is I've always been drawn towards either building or investing in things that haven't ever been done before. And, I find the new to be exciting. And so I I actually started my career as an actuary and very quickly, I'm not an industry known for innovation necessarily, but we actually built a software company that was a spin out, ended up being acquired by JP Morgan. And that kind of set me on the path to software, software as a service and kind of financial services. So from there, I did a number of startups and then, ultimately found my way to Visa, where I helped build and then scale or helped launch and scale their venture program, Visa Ventures, into a global program.

And then after running that for several years, it was a great gig and really enjoyed my time there, but I had the itch to build again. So I went back into the startup world and built a led BD and and strategy there for several years for a company called Very Good Security that is in the data security and enablement space. And after building that company with the founders for some time, I m 12 reached out and just an amazing opportunity. You know, I think the the ability to connect startups and larger companies in a constructive way, I have a long standing belief that if you can marry the strengths of a startup, the agility, the innovation, the kind of the nimbleness of a startup with the scale and resources and distribution of an incumbent, magical things can happen. And so to be able to have be able to play this role at at Microsoft and m twelve is really just fantastic.

So I'm very fortunate. Wow. Well, so I read through the m twelve's full history, and there's a ton to discuss. But our for our listeners who aren't familiar, can you walk them through how m twelve came to be? Sure.

M twelve was founded in 2016. It's the corporate venture arm of Microsoft. So that means Microsoft is our sole investor, our LP. And we've done over the lifetime of the fund over a 120 investments. We've had over 20 exits and also 15 unicorns.

And we're a we're a thesis driven VC, which means that we invest focused on specific areas aligned to business areas and areas of interest for Microsoft. We don't necessarily take direction from from Microsoft, but we are aligned to the things that Microsoft cares about, including things like AI, cloud infrastructure, cybersecurity, developer tools, also vertical SaaS, which is my area of expertise, and then also gaming and web three. And so we are we have a very good relationship with Microsoft, but we also operate what I would call semi autonomously. So we have our own investment process, and we are able to invest independent of Microsoft. But we do build a strong connection kind of back to the parent organization.

So we sit in a group called business development strategy and ventures, and we help to bring signal back to Microsoft as well as find interesting companies. The idea is to kind of see help Microsoft see around corners and see into the future and support founders and companies building transformative technology. So how would you describe m twelve in relation to a traditional accelerator? Yeah. We are very similar to traditional VCs.

We are measured on both financial returns as well as strategic impact, and I think that may be also where there's some difference. So a traditional venture capitalist is typically, you know, they're an asset manager. Right? They're deploying capital with the goal of returning money, and, certainly, that is our goal too. We're quite clear that we are trying to achieve financial returns.

But in addition to that, we're also looking for ways to add strategic impact, and that takes a variety of different forms. It's often in the in the way that we engage with our portfolio companies and kind of help to accelerate outcomes with and for them. So that might be making connections into different parts of Microsoft, or it might be helping them accelerate their go to market motion, could even include product integrations or other types of strategic partnerships, which are not a precondition of investment. We don't require that to do an investment. We actually are just looking for sound financial returns and and good businesses, good companies, first and foremost.

But then we also look for ways in which we can add value meaningfully as being part of an or an extension of Microsoft to a certain extent. So and we've been fortunate to have a number of examples of ways we're able to transform and accelerate outcomes with and for our portfolio companies. That's the biggest difference is instead of just being an asset manager or a financial VC, we also look for ways to drive strategic outcomes. That makes sense because, again, the direct relationship. So I saw a quote in m twelve's history that upon the name change to Microsoft Accelerator, I think around 2016, the focus shifted to startup enablement rather than startup investments.

What's that mean? So m twelve is the venture arm, not not an accelerator, so which is a slight difference. Just to clarify, we make equity investments into start ups, and then we find ways to kind of help them accelerate the outcomes. And so we actually have a portfolio development team that I think is kind of our secret superpower. They are really a force multiplier, and they work with our companies during and post investment to find ways to connect the dots into Microsoft and our broader customer and partner ecosystem.

So that goes back to what I was saying around ways we can accelerate outcomes and add value to our companies. And so I'm not sure exactly what you may have read, but m twelve's focus is really squarely on finding early stage kind of seed through series B companies that we take meaningful stakes in. We you know, we'll invest in them and then also try to to find ways to add value above and beyond just equity investment. If you look at and if you could maybe help our listeners understand the role that m twelve plays today in in your model versus what it would have looked like at the time of Microsoft's beginning back in the eighties. Well, I think a a lot has changed since the eighties, certainly.

I was very young in that at that point in time. So while I may have lived through Microsoft's early days, I think, I was probably focused on other things as a young child. But I think really the focus for us today is finding transformative technologies and interesting companies. You know, I mean, Microsoft has achieved kind of a level of scale these days and we're obviously involved in a number of different businesses. That's fantastic.

And it allows us as m12 to invest in a wide range of potential startups across, you know, six major investment categories. But we're also looking for ways that we can help accelerate the startup ecosystem broadly. Right? I think Microsoft is very keen on supporting startups across the board. We have a number of different teams and resources stacked against this.

M twelve, for example, works very closely with our friends at Microsoft for Startups that have a whole range of benefits available to startups that doesn't require any sort of investment or partnership with Microsoft, which offers access to cloud credits and a number of different amazing things through, Founders Hub, for example. We also have co sell programs and other ways to accelerate go to market or product partnerships with and for startups, both those who are in the portfolio of m twelve, as well as companies that Microsoft for startups engages with in the broader startup ecosystem. So, really, Microsoft, I think, is finding a number of different ways to be supportive of innovation and of startups building transformative experiences in technology. Yeah. Where I'm really coming from, and and again, I was a young lawyer back in, you know, the eighties, and I'm sure there were corporations that were doing investment.

But the term that came to mind to me for companies thinking about the future was r and d. Right? And so how that would take shape, I always thought of as an internal process where within the four walls of the company, so to speak, they would be developing their future products and so forth. And it seems like that and, again, Microsoft being Microsoft. It seems like there are other companies in this game now that are getting directly into the more VC world.

And I'm wondering again is maybe it was happening back then and I just wasn't aware of it, but it seems like there's a new trend of these funds that are being set up. I mean, we're certainly hearing about them more. I'm wondering if that's something that is discussed in terms of when you're thinking about, like, a fund going out and doing normal fundraising. Right? We go to pension funds and otherwise.

You're in a different world being tied to Microsoft, and I'm I'm wondering kind of if you see from a societal perspective how that is changing. It's an interesting question. You know, I think corporate venture capital has almost as many flavors as the companies that engage in it. Right? And I think every company has their own reasons for doing it.

I happen to think that m twelve is actually set up almost as ideally as you can a a CBC program, frankly. Yeah, I was fortunate to help start and kind of scale Visa's program, and we were actually very structured very similarly. And that, you know, m twelve is not trying to be the r and d arm of Microsoft. Right? We have a lot of people in house that are building interesting things.

And, actually, one of the things is it's worth mentioning, we don't share information from our startups with Microsoft without express permission of the of the startups. We actually keep a it's very intentional. On our part, both for startups as well as for Microsoft, we wanna keep a kind of a bright line between those two worlds. But we are really interested in understanding innovation and supporting entrepreneurs and founders that are building really transformative things. And I think by working with them closely and finding interesting ways to help accelerate that their outcomes or to work with them meaningfully, I think we do both benefit.

Right? We learn things from each other in in a permissioned, you know, collaborative way. But the work we do, I think, is really about when you think about where m twelve is investing and venture capital as a whole. Right? We're trying to see into the future to a certain extent.

Right? We're trying to see very aptly, you know, to your show name, we're trying to see where the puck is going and and trying to get ahead of the curve. Right? And so that's really our focus. It's less about being we we do bring signal back and kind of keep our finger on the pulse of the market overall because I think that's that's the interesting piece is we get a very unique insight into kind of broadly where the market is headed, trends that may be emerging, including things that maybe are not a core priority for Microsoft today or maybe are not even on our radar.

Right? And that's really our goal is to not only find the best companies possible to invest in and work with, but also to bring sort of market signal back and understand at a macro level, right, really what's happening and how should we be thinking about technology or market trends that are unfolding. But it's not about, you know, siphoning off information and sending it back. Like, we don't do anything like that. It's really much more kind of high level and also just trying to figure out where where the most transformative technologies are being built that it may be happening on a tiny scale.

Right? Startups by definition, they start from nothing. Right? And they are trying to grow and get distribution and scale. And, getting your finger on the pulse of that signal and seeing what's emerging, that's really one of the areas where we excel and really focus our energies, much more so than trying to inform our first party product development.

Got it. That makes sense. So let's transition, Peter, to the meat of the interview, and I'd like to do that sort of playfully. So on November 20, you tweeted, if you're a start up building an AI, it's a great time to chat with us at m twelve v c, Microsoft venture fund. My DMs are open.

And then one day later, you tweeted, rip my DMs. So people are gonna see this interview, and they're gonna see Microsoft in investing, and they're gonna immediately go into think OpenAI, Sam Altman, and the events of November 17. Can you tell us how m twelve fits in or doesn't fit in with all of that? Sure. So, yeah, RIP My DMs.

We got a lot of outreach from founders, which is an excellent problem to have. I'm always grateful for any founders and companies that wanna talk to us, so keep it coming. I don't mind being buried under a mountain of DMs. But, as to your question about OpenAI, Microsoft overall has a great relationship with OpenAI. I don't think anything's changed really in terms of the nature of Microsoft's relationship.

M twelve, just for sake of clarity, did not actually invest in OpenAI. That was a Microsoft investment. Although, we do have a a good relationship with OpenAI from the m twelve side. In fact, recently, you know, one of the benefits of working with m twelve is we help companies navigate Microsoft and our technology as well as our partner ecosystem. And so with OpenAI, we've actually created a very good relationship.

And recently, we hosted an event where about 30 of our portfolio companies spent a day with them in their offices talking about their latest technology, some hands on engineering help, and going through kind of new product updates. So that's an example of ways in which we try to help our portfolio companies, you know, including but not limited to, access to folks at OpenAI and and other partners and customers. So I do think it's important for people to understand the distinctions we're talking about now. When we read something like Microsoft corporate made a billion dollar investment in OpenAI in 2019, or they made a $10,000,000,000 investment in 2023 after the launch of chat GPT 3.5, How are those decisions at corporate being made and who are they coming from? If not you, right, which is the case, how is that different from what you're doing with Microsoft?

Yeah. That that's a better question for the folks that actually did the deal because I am not privy to the nuances of the deal, so I would refer you to them. But in terms of what we are focused on is really early stage technology investing. Right? So c through series b.

We do work closely with the broader Microsoft, obviously, company as well as stakeholders throughout the organization in different departments. And so we, from the m twelve side, are focused on early stage investing and then helping our founders and our portfolio companies access kind of the depth and breadth of resources and capabilities available to them may, you know, may include access or collaboration with OpenAI. Gotcha. So staying with Microsoft, earlier this month, Microsoft announced free Azure AI infrastructure to select Y Combinator startups as well as m 12 portfolio companies with the intention to expand the program to other accelerators and startups. How was that decision made and how has that been going?

Yeah. It sounds like you saw our announcement around, access to GPUs. It's we did that in partnership with our friends at Microsoft for Startups. I mentioned them earlier. They, provide a wide array of services and benefits to the broader startup ecosystem.

And alongside or in partnership with them, we were able to secure an, you know, an allocation of GPUs for portfolio companies that are building transformative things in AI. And so we provide access to them to these dedicated computing resources to help kind of power and, let them scale up and build their AI innovations. And then over the time, the vision is to expand that access to additional accelerators and additional partners. But that's one of the benefits that, you get through, I guess, being a portfolio company of m twelve. So in an interview recently with Crunchbase Yes.

Your colleague, Michael Stewart, said m twelve looks for a clear vision that the founder has about this moment we're in and what's on the other side because that is certainly the cloudiest thing to see through. What does M12 think about the moment we are in now and what's on the other side? In terms of AI or just broadly in technology? It's open ended. Well, Well, I mean, I think that, you know, that's our job at the end of the day is to try and figure out where where the puck is going and where technology is headed.

And so, you know, that cuts across all of the different thesis areas that we focus on. So, you know, again, we try to root our or ground our investments in the core thesis areas that we've prioritized for investment. And I think the the thing I love about having been on both sides of the table on the, you know, the operator side as well as the investor side, I'm always inspired by the creativity and the grit and perseverance of founders and their ability to create something out of nothing. I think, you know, I was saying at the beginning that kind of the common thread that's run through my own career is either building or investing in things that have never existed before, that are net new. And that's the stuff that really, I think, excites me.

So in the context of AI, for example, you know, it's transforming how software is being built. It's going to transform, I think, our notion of what software is potentially. And the things that I think are particularly compelling and or exciting are going to be AI first experiences or AI native experiences. I think with every platform shift, you see new modes of interaction, new things become possible. Uber or Airbnb probably would not have become possible at the scale that they did without mobile phones.

And before mobile phones, you had the internet and you know, cloud computing. And there's some there have been so many platform shifts that have just ushered in entirely new ways of operating or new ways of even interacting with software or what this notion of software is. And, you know, when you think about kind of the shift in mobile, like, from web to mobile, like, the answer was not just porting your web page and shoehorning it into a mobile view. Right? It was the answer was designing experiences from scratch that take advantage of this new platform, you know, IE mobile.

And I think the same thing is going to happen with AI. It's going to like electricity, it's going to electrify everything. It's going to infuse many different things, most things perhaps. And from that will come new experiences. And so I think that's the particularly exciting part, an area where we spend a lot of our time focused trying to figure out what's next.

And I think we're most likely to see that through the kind of creative eyes of the founders. For those of us that are not as closely aligned with the practical application of AI and so forth, I mean, for me, a picture is worth a thousand words. So you use chat g p t, you ask it to write an essay for you, you go, oh my god. Now I get it. Right?

I love the example you give about Uber and a mobile phone. Right? So for those of us who haven't had a chance to really think this through and you're looking at your large portfolios and the ones you're excited about, can you bring to life for us some of the examples of how AI is gonna change it? Because, again, I can think about it how it makes things faster. It can replace people and it can do things.

And I can think about talking to it on, you know, my iPhone or or on Amazon. How is it gonna change us in the same way mobile phones changed things with Uber? Yeah. So I'm I'm happy to give you some examples that I'm aware of today, but I will also say I'll caveat that by saying I don't think we have yet seen truly, like, transformative net new experiences enabled via AI, if that makes sense. And Sure.

There have been a lot of interesting companies being built. Don't get me wrong. But when you think about with every platform shift, you get certain things just like inherent in the shift or in the technology. And I think it takes a while for folks to to really understand and fully take advantage of those capabilities because by definition, all we know is what came before. Right?

And so it takes us a while to adapt and adjust. But, you know, some examples that are, like, happening today, you know, one of our portfolio companies, Inworld, we we actually just announced a partnership Microsoft announced a partnership with In World. They are a character engine for NPCs, non playing characters in games that enable entirely new forms of gameplay and also narrative through dynamically generated stories or quests or character experiences. So you can imagine you might be playing the same game, but it's never the same experience twice potentially, right, because it can adapt to your interactions in the game. So that's one example that where it's almost like a choose your own adventure, but with infinite possibilities.

Right? Another company of ours, Typeface. We invested in them earlier this year. They're a generative AI company that helps enterprises create marketing content. We invested in them in particular because they understand and not only do they have the technical acumen and really strong kind of product pedigree, but they also understand the challenges in front of enterprise customers around creating content that is that reflects the brand or the tone and the voice of a company and is able to create collateral across multiple different formats for and with, you know, their enterprise customers.

And they actually were featured in one of our executive keynotes at our annual developer conference build. Another example is Noble AI. They're a company using AI to actually accelerate the development of better performing and often more sustainable more environmentally sustainable and reliably sourced chemical or material products. So think about if you wanna develop new materials today, it usually requires running a lot of physical experiments. These take time.

They're expensive. You can only do a a certain amount in a certain period of time. Noble uses AI and software to simulate these things and to actually to facilitate new material discovery as well as new formulations. So, you know, these are just some of the ways that AI is being used today, in real applications. And I'm very excited about what might come in the future that we haven't yet seen.

That's a great example. And, you know, knowing what the future is gonna be by definition, if we're not there, we don't know. But it is interesting to see from the companies you're talking about bringing a life examples where people have crossed that barrier, so to speak. Traditional VCs are having a lot of conversations about scaling back their investments right now and, you know, going back to an EBITDA model instead of a revenue valuation model. How will m twelve navigate what may be a soft landing or a recession in the next year?

Are you advising your companies, or are you from a strategic perspective doing anything different in this environment? So we will always stand behind our founders. We try to support them in any way we can. So and a number of them are navigating this environment alongside us. Right?

And so, you know, we're always trying to do whatever we can to support our portfolio companies. I think more broadly in terms of deploying capital, we're actively investing. I think across the market, you just pointed out, I think accurately that the landscape has shifted significantly. Revenue multiples and valuations have reset significantly. We're back at levels that, you know, harken back to, like, 2015 or even 2013, like, you know, ten years ago, like, kind of six x ARR for multiples in terms of public market valuations for a lot of SaaS companies, at least in the median, not necessarily the top quartile or top decile, but, like, the median valuations.

And so that obviously changes the math of what, you know, for the foreseeable future at least, what, I guess, funding rounds can and and will look like. And so, you know, we're constrained by the market realities just like any other VC, but that doesn't mean we're not gonna continue investing. Right? And we're actively investing. We're looking for great companies.

And I think what we are seeing, which is very encouraging, is a number of founders responding to this new kind of market reality. The free money days are definitely gone, but I think it has necessitated kind of a level of I I don't wanna say frugality, but kind of back to basics and fundamentals on the part of a lot of entrepreneurs. And I think most of them at this point recognize that they need to run a lean team. The good news is a lot of comp there are a lot of really interesting start ups out there that are building transformative businesses with lean teams and doing amazing things. And I think that's actually the encouraging thing is that we're getting back to kind of the fundamentals.

It turns out if you're building a business, at some point, it needs to make money. Right? And so I think companies founders are recognizing that and responding accordingly, and I think those companies will be rewarded with funding as well. So we're always looking for companies like that, and I think there's a lot of opportunities still. I mean, that's one of the changes.

I mean, you make the point, companies have to make money at some point. I mean, yes, but not in the last ten years. It's we've been in this kind of quantitative easing, you know, free money for everybody type of thing, and the number of companies that aren't profitable is is certainly higher than it was before, and how how material an effect that's going to have on the economy as those companies work their way through, we're we're still trying to figure out. In terms of the types of conversations you're having to have with people and the way in which you invest, do you co invest typically in these companies? Are you the lead investor typically?

How how does that play itself out? Yeah. We do have some flexibility there, which is quite nice. So we will lead or co lead. We often like to co lead alongside another top tier investor, often on the financial side.

We do try to take meaningful stakes in our companies. We're not just investing only for strategic rationale. I think I mentioned earlier, we're we're measured up by financial returns. And so we're at the whims of power law math like any other VC. And so we do take that into account.

However, we can be flexible in terms of joining a syndicate or putting a syndicate together with alongside other investors. We, you know, we do play nicely with others. And so we're happy to co lead or join a syndicate as long as we can have kind of a meaningful relationship with the company. And do you go on boards typically, or is that something you you know, adviser roles? Do you go on the boards?

How does that typically play itself out? Selectively, yeah. We will take board seats on occasion. We'll also occasionally take board observer seats. Really comes down to the relationship we build with the founder and kind of the stake we take in the company, but we will do both.

And are you geographically constrained at all? We are not we do invest globally. Our center of gravity in terms of investment, and the team is largely focused on the West Coast, so primarily in Redmond and also the San Francisco Bay Area, which is where I and most of our investors are located. But we do look and invest globally, and we have a number of companies in our portfolio from around the world. Got it.

So, again, looking at your portfolio and the things that excite you and the things that are maybe being challenged, where do you see the puck going in terms of the next few years? Yeah. It's an exciting time to be investing. I'll also say it's it's one of the most most exciting and also most difficult times as an investor, at least in my investing career, because there's so many transformative companies being built, but also the pace of change has accelerated to what feels like breakneck speed. And so, you know, we're constantly on a quest for durability, so to speak.

I'm always looking for companies that will persist, technologies that are really foundational or transformative in a meaningful way, as opposed to kind of just an incremental improvement over what already exists today. So I think AI, obviously, that's, you know, the big one to watch and and to see how that transforms software. I mean, GitHub, which is affiliated with Microsoft, has already, you know, put out a number of stats around how AI is transforming, how software is even getting built, and how that's actually acting as a force multiplier for developers. You know, vast majority of developers even kind of feel more confident in their code when using, like, things like GitHub Copilot, and, it's being able to kind of let them do even more on the software creation side. And then I think we talked about this a little bit, but AI first designs and AI native experiences, that's something I'm very excited about.

You know, almost by definition, we haven't seen that yet because it's kind of like I'll see it. I'll know it when I see it because it'll be just you know, so it'll look so different than anything that maybe came before. You know, and we've seen that with other platform shifts. The challenges in investors to recognize when something that looks really different, to understand what the market opportunity might be because some of the biggest companies that have been built in the past have created markets, right, or expanded markets that didn't even exist before. So I think the important thing is to have an imagination and also be able to see into the future as to, like, what does this technology potentially enable and how big could this particular market get even if it doesn't necessarily exist today.

Right? And then, you know, this is maybe not everyone's definition of exciting, but it's very exciting to me. It doesn't quite have this the hyper sex appeal that some sectors do, but I actually love kind of laggard and unsexy industries, like really unsexy b two b companies. So I have a real fondness for founders that are kind of nerdy or have a special domain expertise in a particular area and really understand a problem or an opportunity that hasn't been well addressed. And believe it or not, even though we're talking about AI all the time, there are a lot of industries that have not even fully recognized or realized the benefits of software, frankly.

And financial services, manufacturing, there are a number of these types of industries where there's actually huge efficiency gains to be still to be had, but just by deploying software in certain instances. In fact, I'm talking to a company in the pipeline space in oil and gas, right, that is deploying software into areas where it's literal humans pushing literal buttons in a room. Right? It's hard to imagine when, you know, we're going from AI in the future to these industry, but this is the real world, right, moving, you know, huge amounts of of resources around and it's it hasn't yet been fully penetrated by software, let alone the cloud. And so I think those are actually real opportunities and and things that I get particularly excited about, even if it's maybe not something that's gonna make, you know, headlines.

Is AI I mean, you're seeing this in the r and a stage. You're seeing it out there. Is it going to explode faster than we expect, or do you think that there's at some point, it's gonna sink in that, oh, yeah. Sure. You know, it's doing all these cool things.

It's making things faster, but it's not as revolutionary as people are talking about. Or or do you think that it's coming in a way that we can't even imagine? I think maybe a little bit of both. There's a quote that I'm I won't do justice to. I I it's often attributed to Bill Gates, but it people tend to overestimate what they can do in a year and underestimate what they can do in about ten years.

I think that's probably going to be true for AI and technology in general. Having said that, if you look back a year ago, right, ChatGPT was unleashed under the world almost exactly a year ago. Think about how much has changed in that time, the capabilities that we have now that almost we take for granted. It's like, oh, yeah. That's just a thing that now exists.

It's like part of our world that we couldn't even comprehend maybe eleven, twelve, thirteen months ago. And so the pace at which this thing is moving certainly seems to be accelerating and is much faster than previous cycles that I've been a part of. But at the same time, I also think it's going to take a little bit of time, and that's the challenge and opportunity for us, frankly, both as M12 and as Microsoft, is to make real for folks the applications of AI, right, and to find companies that are doing this. All of our customers and our partners want to know the answer to this too. Right?

What is this going to do not just to let me create cool images or videos that you know, with just by prompting it with some text, but also what does this do for my bottom line? How does this actually help my business? And so those are the things that I'm really focused on in terms of B2B software and real applications for enterprise, and those are very exciting. Right? And we're seeing some of those emerge.

I think we're going to see a lot more of them. But that's the both the challenge and the opportunity for us as m twelve and Microsoft broadly is to make this real for people. And, you know, those of us who live and breathe technology, we we're so absorbed with this. But, really, Main Street has to appreciate and understand this as well. Right?

And they have to see the benefits for themselves. And so that's I think that's really the task before us is to find and also fund the companies that are gonna make that real. I think, you know, just the thing to underscore is we really are inspired by and love to support founders and builders. I really can't say it enough. I'm very inspired by the people that are in the trenches building every day.

I feel extremely fortunate to be able to be able to help fund them and accelerate their outcomes, but also to build a bridge between Microsoft and the resources at our disposal and the startups that are building the future, so to speak. So it's an amazing position to be in and I'm very fortunate and so we're just grateful for the founders that we get to partner with. So an investor wants to start a company, and they are thinking about how they're gonna raise money. They can call Peter or they can call this person. In terms of your profile and your relationship with Microsoft, what do you think is your single most important differentiator?

That's a great question. I would say that it's kind of like the the membership has its privileges sort of approach, the old AmEx tagline. That kind of speaks to m twelve and what we can bring to bear. I think I alluded to this at the beginning, but the thing that I'm most passionate about is building a bridge between incumbents and large organizations that have scale and resources and startups that are building the future. I think if you can actually take the strengths of both of those two entities and combine them, magic can actually happen.

I firmly believe this. I was fortunate enough to be part of creating some of this in past roles in my venture career. And so I think that type of force multiplier by partnering with Microsoft and m twelve and access to the resources and the, you know, the ability to open doors and make introductions for the startups that we work with, I think that's really transformative. And we've seen this time and time again with our portfolio companies where we're able to deliver real concrete meaningful value to them and connect them to partners and customers in a way that maybe, you know, a lot of other folks can't given our scale and our reach. And so that's something that I think really helps us stand out.

And founders, I think, also recognize this. They're starting to recognize the importance of having a more strategic partner in the VC ecosystem. And we're seeing a lot of founders that have they've told us outright, like, I love this, you know, version of m 12 that is helping me accelerate my business. Right? And that's, at the end of the day, what they care about, and that's what we are endeavoring to deliver.

Is there ever a concern on CEOs parts or entrepreneurs that are coming to you that they won't have the flexibility to really kind of control their destiny and go out and pull a lot of money out of the company and do what they want because there is a strategic that's behind this and at some point they're going to want to hold on to it and control it to a certain extent. Is that something you ever have to deal with? Fortunately, no, because that's not how we think about it or how we operate. We do not require startups to do any unnatural acts. We don't require any sort of commercial relationships or onerous terms.

It's actually and I feel strongly about this in just broadly in terms of corporate venture capital. I think the best outcomes are when two parties want to work together and see the benefit of working together. And if you're trying to force an outcome, it it's not gonna end well in the long term. And so we don't do that. We really try to find ways to be additive, and we don't force founders to do things that are not good for in the best interest of their business.

Having been on the other side of the table as a operator, I very much understand the trade off. Right? And I had corporate VCs invest in my last company, and that was very much by design, right, because of what the the strategic impact that they could deliver. And so I think it actually can be very additive and transformative, but we don't require founders to do anything that's not in the best interest of their business or that wouldn't benefit them. Cool.

Perfect. This was great. Thank you so much. It was a pleasure being with you, and I really enjoyed the conversation. Thanks for having me.

I did too. Cheers. The POC Venture Capital Beyond is produced by CMG Advisors. If you enjoyed the conversation today and haven't yet subscribed to our show, you can find us on iTunes, Apple Podcasts, and SoundCloud. Feel free to leave a review while you are there and maybe even a five star rating.

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