20VC Why Too Many People Give Up Too Quickly, Why You Should Never Start A Venture Without Owning The Underlying Data & Why We Have OverEstimated The Ability of Automation with Dennis Mortensen, Founder & CEO @ X.ai

In this episode of "20 minutes VC," Harry Stebings interviews Dennis Mortensen, the founder and CEO of X.AI, a company that simplifies meeting scheduling through AI software. Mortensen, an experienced entrepreneur with past ventures and an author, has raised over $44 million for X.AI from notable investors. He shares insights on the importance of data ownership for startups, the challenges of defining useful data, and the evolution of user interfaces towards conversational AI. Mortensen emphasizes the significance of customer pain as the foundation for a company, rather than technology-first approaches, and discusses the future of human-machine collaboration. He also reflects on his journey with X.AI, including lessons learned and the importance of a steadfast founding team. The episode concludes with Mortensen's vision for X.AI to become the standard for meeting scheduling and his aspirations for the company's growth.

• Dennis Mortensen is the founder and CEO of X.AI, a startup focused on AI software for scheduling.
• X.AI aims to solve the hassle of meeting scheduling and has raised over $44 million in VC funding.
• Dennis has founded three companies prior to X.AI, with varying outcomes including acquisitions and one failure.
• He has authored a book on data-driven insights.

"And now thrilled to welcome back the very special Dennis Mortensen, founder and CEO at X AI, the startup that realizes scheduling sucks and provides ridiculously efficient AI software that solves the hassle of meeting scheduling."

The quote introduces Dennis Mortensen and the purpose of his company, X.AI, which is to provide efficient AI software for scheduling meetings.

• Dennis is originally from Denmark and has lived in England and Budapest.
• His analytics venture was acquired by Yahoo, leading him to move to New York.
• He has been living in New York for over a decade, where he started X.AI.

"And part of the acquisition terms were that I moved to New York and I thought I'll just spend a couple of years in New York. And that was ten years ago."

This quote provides context to Dennis's move to New York and how it became his long-term residence due to professional circumstances.

• Dennis was inspired to start X.AI after reviewing his calendar and realizing the excessive time spent on scheduling meetings.
• The idea for X.AI came from a desire to find an escape from the tedious task of meeting scheduling.

"I actually did start this whole venture by going back into my calendar and seeing exactly how many meetings that I did."

The quote explains the personal experience that led to the creation of X.AI, highlighting the practical problem that the company aims to solve.

• Success in previous ventures has encouraged Dennis to pursue more ambitious projects.
• He believes that success breeds the courage to undertake greater challenges.

"So some success breeds bravery to do something even more grand next time."

This quote emphasizes the positive impact of success on an entrepreneur's mindset, leading to greater boldness in future endeavors.

• Dennis reflects on the failure of one of his ventures, noting that he could have handled the shutdown process better.
• He suggests that entrepreneurs should accept defeat gracefully and learn from the experience.

"It's okay to lose, but when you lose the first time, kind of like drowning, you don't want to drown, right?"

The quote metaphorically compares the experience of a failing business to drowning, highlighting the emotional struggle and the importance of accepting loss.

• Dennis believes most people give up too early on their startups.
• He prefers to err on the side of giving up too late rather than too early, despite the risks.
• The difficulty lies in balancing the vision against the reality of a failing venture.

"I do think, though, and this is pure opinion, that most people give up too quickly."

This quote captures Dennis's perspective on the common tendency for entrepreneurs to abandon their projects prematurely and his personal inclination to persist.## Determining End Points for Ventures

• It's important to establish a clear end point for a venture before running out of resources.
• Defining the end point should be done while in a rational state, not during the heat of the moment.
• The end point can be based on financial constraints, such as the depletion of funds or the inability to pay salaries and taxes.

"I think, is having at least determined upfront what you would agree is some sort of end to this, which could be no more money in bank, but not necessarily no more money in bank might just mean that you're not paying yourself any salary anymore."

This quote emphasizes the importance of setting financial boundaries for a venture, such as the point at which personal salaries or taxes can no longer be paid.

• AI should be viewed as a tool to address existing problems more efficiently, not as the primary focus of a company.
• Successful companies are built on solving a fundamental pain point and may use AI to enhance their solution.
• The concept of "AI first" is not as important as addressing customer pain and using the best available technology to do so.

"You might then figure out that, hey, there's this particular technology which we can use to fix it faster, better, cheaper, more optimal."

This quote suggests that AI can be a powerful tool for improving solutions to customer pain points, but it should not be the primary reason for starting a company.

• Standardization and commoditization of AI tools do not necessarily hinder startups.
• The real challenge lies in defining the problem space, acquiring and labeling data, and crafting models.
• Startups should focus on the unique challenges of their domain rather than worrying about the availability of standardized AI tools.

"So there's a ton of challenges before you're trying to kind of craft your first model, and I think any of the models that we've done here, if that's based on some output of a tensorflow installation, fine, because that is the least of challenges."

The quote indicates that while standard AI tools like TensorFlow are useful, they are not the primary challenge for startups, which should instead focus on defining and understanding their problem space.

• Owning the underlying data is crucial for any venture's success and independence.
• Startups should focus on creating data acquisition loops where more usage leads to more data, improving the product and attracting more customers.
• It's important to project how much data is needed and ensure that the startup has the resources to reach that data threshold.

"But I very much agree with what you said, and I would never, and I'm underlining this, never start any venture for where I didn't own the underlying data on which my venture operated."

This quote underscores the strategic importance of owning the data your business relies on, which can act as a defensible moat against competitors and ensure the company's autonomy.

• The exact amount of data needed for a venture to succeed is difficult to predict.
• Startups should make projections about data needs based on early results and adjust their strategies accordingly.
• There is typically a point of diminishing returns on additional data, which companies should be aware of.

"There will be a moment in time where there's a diminishing return on that extra piece of data, which you get, which is fine."

This quote acknowledges that while accumulating data is important, there comes a point when each additional piece of data contributes less to the overall value of the data set.

• There is a belief that conversational UI represents a significant shift in human-device interaction.
• The relaunch of AI products like X.AI's Amy and Andrew indicates a commitment to this belief.
• The effectiveness and adoption of conversational UI continue to be areas of exploration and development.

"So I'm a believer. So anybody who listens to this should expect me to have some bias, but no more bias than tomorrow, 10 October, we're going to do this grand relaunch of X AI, Amy and Andrew and them kind of being mixed in uis."

This quote expresses the speaker's belief in conversational UI as a transformative technology, highlighting their own investment in the space with the relaunch of their AI products.## Evolution of User Interfaces (UIs)

• Dennis Mortensen reflects on the progression of user interfaces from command line interfaces in the 1980s to the introduction of graphical user interfaces (GUIs).
• The evolution continued with the advent of mobile UIs, characterized by touch interfaces that made technology accessible to children.
• Dennis believes conversational UIs represent a distinct and significant shift in how users interact with technology.
• He suggests conversational UIs could democratize access to computing by allowing even the least tech-savvy individuals to perform tasks through simple voice commands.
• Despite his optimism for conversational UIs, Dennis acknowledges that they will not replace other UIs but will coexist with them, serving different purposes and user preferences.
• He anticipates a change in behavior and the emergence of new applications specifically designed for conversational UIs.

"I do believe that the conversational UI is a distinct UI in its own right."

This quote underlines Dennis's conviction that conversational UIs are a unique interface that will have a significant impact on technology use.

"I think it might finally fully democratize access to compute."

Dennis suggests that conversational UIs have the potential to make computing accessible to everyone, regardless of their technical ability.

"I think we'll still have a mix of uis, just like most of my engineers manage all our servers on the command line on AWS."

Dennis acknowledges the continued relevance of various UIs for different tasks and user groups.

• Dennis distinguishes conversational UIs from previous UIs by their ability to handle complex objectives rather than just assisting with tasks.
• He highlights the ease of describing objectives and having an agent perform the necessary tasks without the user's involvement.
• Complex tasks like setting up meetings or scheduling recurring events are cited as examples where conversational UIs excel.
• Dennis notes that conversational UIs are particularly adept at understanding and executing multi-step objectives based on user instructions.
• He is excited about the potential of conversational UIs and sees them adding significant value to the user experience.

"Now, in the conversational UI, for the first time, it became very easy to describe objectives, things you want done that might require multiple subsequent set of tasks done for where you are not a participant in any one of them."

This quote emphasizes the novelty of conversational UIs in handling multi-step objectives without requiring the user's direct involvement in each task.

"Take a recurring meeting that is actually a little bit of a mess to describe in a UI, but it's very simple to describe in text."

Dennis uses this example to illustrate how conversational UIs simplify the process of setting up complex tasks like recurring meetings.

• Dennis reflects on his past beliefs about AI and admits he was overly optimistic about the capabilities of AI agents.
• He explains that conversational UI design is an evolving field with few established best practices, leading to the development of their own guidelines.
• Dennis now sees the value in AI agents asking for clarification as it can lead to better outcomes, especially in complex scenarios.
• He discusses the integration of simple binary responses, like buttons for yes/no answers, to streamline interactions in conversational UIs.
• Dennis acknowledges the importance of balancing automation with human input and the subtleties of human negotiation that AI may not capture.

"So hand on heart, I had certain beliefs... that turned out to be not true or way too optimistic."

Dennis admits that his previous expectations for AI agents were unrealistic and that he has since adjusted his perspective.

"The agent going back asking for clarification is not a sign of weakness."

This quote highlights a shift in understanding about conversational UI design, where seeking clarification is seen as beneficial rather than a failure.

• Dennis is asked about the retention of his founding team since 2013, which is considered rare in the startup world.
• The conversation is cut off before Dennis can respond, so his insights on this topic are not included in the transcript.

"So you of all people, perhaps even more than me, know the few reasons for why many startups end up not succeeding to the extent you had hoped for."

Although the quote does not provide Dennis's answer, it sets the stage for a discussion on the importance of team dynamics in startup success.## Team Dynamics in Startups

• Founding teams with prior experience working together can navigate the challenges of a startup more effectively.
• It's beneficial when team members have distinct, non-overlapping skills and responsibilities.
• Mutual understanding of each member's strengths contributes to a smoother operational flow.
• Startups inherently involve difficult periods, but maintaining a clear direction can help the team persevere.
• Teams should be prepared for the possibility of failure, but remain committed to their vision without drastic changes in direction, avoiding terms like "pivot."

So of the four founders where I'm one of them, in X AI, three of us already worked together in our prior venture. So we worked together for about ten years. So we're not surprised by all those kind of little kinks that comes along with being a human being.

This quote emphasizes the advantage of founding teams with a history of collaboration, as they are already accustomed to each other's work styles and personalities.

And we're together because we have specific qualities where there's a little overlap but not much, as in, I know exactly what Alex is good at, he knows exactly what I'm good at.

Clear delineation of each founder's strengths allows for efficient task allocation and minimizes internal conflict over responsibilities.

We also, also agreed that we might not make it, but we are moving forward.

Acknowledging the potential for failure while remaining committed to progress reflects a realistic yet determined startup mindset.

• Dennis Mortensen emphasizes the importance of a disciplined daily routine involving exercise and time management.
• He advocates for a meticulous approach to managing one's inbox and calendar to maintain productivity.

Three K run, 45 minutes on the weights.

A structured morning routine with physical exercise can contribute to overall well-being and effectiveness throughout the day.

Inbox, Cyril. And keeping a very anal calendar.

Effective email management and a detailed calendar are crucial for staying organized and productive.

• Dennis recommends three non-traditional entrepreneurial books that offer different perspectives on business challenges.
• The books cover topics such as the importance of equity, the sacrifices required for success, and discerning whom to trust.

One, the narrow road with Felix Dennis, which will teach you about how much you should value your equity and how much of a fight you should put up if you want to lose one of your shares.

This quote suggests that entrepreneurs should fiercely protect their equity, as it is a valuable asset in their business ventures.

The second book would be shoe dog by Phil Knight.

"Shoe Dog" provides insights into the sacrifices involved in building a successful business and the unlikely success of Nike.

And third, go read the biography of Mike Tyson.

Mike Tyson's biography serves as a cautionary tale about trust and managing success, particularly in the context of wealth.

• Dennis would have prioritized data collection and labeling over initial model building had he known their importance from the start.
• He also would have explored a mix of user interfaces earlier rather than focusing solely on a conversational UI.

I would spend less time on building the first models, as in, none of them survived anyway, and I would spend more time in trying to define what data to collect and how to label it.

Understanding the value of data and its organization is crucial for the development of AI models, as initial models often evolve significantly.

I would have leaned into a mix of Uis quicker, not have spent three years leaning into only the conversational Ui.

Exploring various user interfaces early on can help in determining the most effective ways to engage users and meet their needs.

• Dennis Mortensen envisions X.AI becoming the standard for setting up meetings within the next five years.
• He aspires to see the company's success publicly recognized, symbolized by a banner at the stock exchange.

I just want to spend ten years and become the standard of how to set up a meeting.

This quote reflects Dennis's long-term commitment to establishing X.AI as a leader in its field.

I would love along the way, have a big ass blue banner saying xwai down on the exchange.

Public recognition and a successful IPO are seen as milestones for the company's success and impact.