PreYC Demo Day Msg.ai's Puneet Mehta on The Rise of AI, The Potential For Messaging and Life As A Current YC Startup

In this episode of the 20 minutes VC, host Harry Stebings interviews Puneet Mehta, founder of Message AI, an AI startup focused on conversational commerce. Puneet shares his journey from IBM's Watson center to Wall Street, where he developed predictive platforms for trading systems, to founding Message AI. He discusses the company's growth since its seed funding round, which included prominent figures from the AI world and Y Combinator, and its 100% month-over-month growth post-YC. The conversation then shifts to the broader AI space, with Puneet highlighting the potential of messaging as the next big interface for consumer transactions and the importance of human-assisted AI for personalization at scale. Despite the challenges of convincing large enterprises to adopt new, efficient technologies, Message AI has successfully onboarded Fortune 500 companies. Puneet emphasizes the value of surrounding oneself with smart people and the YC network's role in providing exceptional advice and support. He concludes by envisioning AI's integral role in our daily lives over the next five years.

• Harry Stebings hosts the 20 Minutes VC podcast.
• The podcast often features interviews with influential figures in the venture capital and startup space.
• Harry Stebings also co-hosts the official Sasta podcast with Jason Lempkin.
• The latest Sasta podcast episode features Mahmoon Hamid from Social Capital.
• The episode is promoted with a call to search for Sasta on iTunes.

"I am your host, Harry Stebings, and before we dive into the show today, I want to direct your attention to the official Sasta podcast brought to you by Jason Lempkin and I, where we have released our latest interview with none other than the legendary Mahmoon Hamid, partner at one of the best performing funds in the world."

This quote introduces Harry Stebings as the host and mentions the Sasta podcast, which he co-hosts, and their latest episode featuring Mahmoon Hamid from Social Capital.

• Fridays on the 20 Minutes VC podcast are dedicated to founders, aptly named "Founders Friday."
• With Y Combinator (YC) Demo Day approaching, the podcast aims to explore the latest batch of YC startups.
• The intention is to provide insights into the YC ecosystem and the experiences of founders within it.

"And as it's Friday, that can only mean one thing. It's founders Friday. And with YC Demo Day looming, we thought we would investigate the latest batch and draw back the curtain on the world of YC and all that is entailed for founders."

The quote sets the stage for the episode's focus on YC and its impact on founders, aligning with the recurring "Founders Friday" theme.

• Puneet Kumar is the founder of Message AI, an AI startup for conversational commerce.
• Puneet started his career at IBM's TJ Watson center and built predictive platforms for trading systems on Wall Street.
• He has been recognized for his creativity and innovation by Advertising Age in 2014.
• The podcast also acknowledges its sponsors, including Wonder Capital.

"Therefore, joining me from YC's latest batch, I'm delighted to welcome Puneet Mater, founder at MSG AI or Message AI, an artificial intelligence startup for conversational commerce."

The quote introduces Puneet Kumar as the guest, providing a brief overview of his background and his startup, Message AI.

• Puneet Kumar's career began at IBM's Watson center around the year 2000.
• He transitioned to Wall Street, building infrastructure for trading bots.
• The messaging revolution, particularly in China and India, inspired him to found Message AI.
• Message AI was started approximately 16 months prior to the podcast episode.

"I started my career at IBM's Watson center around the year 2000. From there, I went to Wall Street and I built infrastructure for trading bots. And I have actually been waiting for this time to arrive when AI can play a mainstream role in technology that touches us in our daily lives."

Puneet Kumar discusses his professional background and the inspiration behind starting Message AI, highlighting the evolution of AI in daily technology use.

• Message AI raised a seed round in October of the previous year.
• Notable investors include founders of Google DeepMind and the CTO of OpenAI.
• Message AI experienced rapid growth, with a 100% month-over-month increase since joining YC.
• The startup has attracted some of the world's biggest brands as customers.

"So we raised the seed round around October last year. We were fortunate to have some of the best AI people be in that round. The founders of Google, DeepMind, Thomas and Mustaf, the CTO of OpenAI, Greg Brockman, the chief scientist at the New York Times, Chris Wiggins, and then obviously Y Combinator."

This quote details the successful seed funding round for Message AI and the notable investors who participated, reflecting the startup's strong position in the AI space.

• Message AI allows brands and businesses to communicate with customers via text messaging.
• The platform leverages AI to tap into the top smartphone habit of text messaging.
• Message AI aims to integrate brands into the lives of consumers by being present in their primary mode of communication.

"So message AI is a platform that brands and businesses can leverage so that their customers can text with them. Now, consumers, if you look at the smartphone, their top habit on the smartphone is text messaging."

The quote explains the core function of Message AI's platform, emphasizing the importance of text messaging as a primary communication tool for consumers.

• Y Combinator provides valuable startup advice and focuses on creating products that people want.
• Growth is a key emphasis at YC, aligning with the startup mantra of rapid scaling.
• Message AI has adhered to YC's foundational principles, resulting in significant growth and attracting major brands.

"In my opinion, YC gives some of the best startup advice an early stage founder could ask for. Their slogan, make something people want, sums up most of the key elements you want to focus on and that builds a really strong foundation."

Puneet Kumar praises Y Combinator for its effective startup advice and growth-focused approach, which has been instrumental in Message AI's development.

• YC sets a target of 10% weekly growth for its startups.
• Message AI approached this target by implementing A/B testing strategies to achieve their growth goals.
• The startup's proactive approach to growth has been a key factor in its success within YC.

"So coming in pretty early on, we figured out certain ways that we wanted to a b test in order to achieve that goal and we just started doing it."

Puneet Kumar describes Message AI's strategic approach to meeting Y Combinator's growth expectations through A/B testing, highlighting the startup's proactive and results-driven mindset.## Y Combinator's Scaling and Quality

• Y Combinator (YC) has one of its largest batches with 126 startups, raising skepticism about maintaining quality.
• Despite the scale, the quality of mentoring and advice received from YC has been exceptional.
• The YC network is highly significant and supportive, providing personalized attention and advice.

That was one of the part that I was actually amazed about at that scale. Again, the quality of advice that we've been receiving is just amazing. The YC network contributes very significantly and is probably one of the best networks for anything in the world.

The quote emphasizes the speaker's amazement at the high quality of advice and support provided by YC, despite the large number of startups in the batch, highlighting the strength of the YC network.

• Casser, Jared, and Tim have been mentioned as mentors for the speaker at YC.
• Personal attention from partners and the YC network is highlighted as a significant aspect of the mentoring experience.

So we've had casser, Jared and Tim helping us at YC.

This quote identifies the mentors who have been assisting the speaker at YC, suggesting a personalized level of support.

• The company focuses on two key areas: AI and go-to-market strategies.
• They have a strong set of investors from their seed round in both AI and go-to-market.
• The process of investor selection involves categorizing them according to their alignment with the company's focus areas and potential to scale the business.
• The "college litmus test" is used to gauge how well the startup team gets along with potential investors.

So now, again, that we are having some of these discussions, we are looking at those two elements and we are saying, how do we bring these together in the best possible form, the best commercially viable use of this type of AI and the most exciting investor conversations we normally have all follow the same format.

This quote outlines the company's approach to investor discussions, focusing on aligning investor interests with the company's core areas and scaling potential.

• Startups should take investor assembly seriously, treating it as a long-term commitment more serious than marriage.
• It's important to ensure compatibility on both intellectual and emotional levels due to the inevitable ups and downs of startup life.

Yeah, I would say the key thought process that goes behind this is take it seriously, because in my mind it's even more serious than marriage.

The speaker advises startups to approach investor relationships with the seriousness of a long-term commitment, emphasizing the importance of compatibility beyond just the intellectual fit.

• Startups are advised to let their businesses sell themselves, minimizing the need for heavy pitching.
• YC prepares startups to articulate their business effectively in a three-minute pitch.
• The advice "lift with your legs, not your back" suggests building a compelling startup that naturally attracts attention.

What that means is you have to build your startup enough where it does the selling and pitching for you, not the other way around.

This quote suggests that the strength and appeal of the startup itself should be the primary selling point, rather than relying on the pitch alone.

• The speaker's company has focused on both sales and product development.
• By addressing both key elements of creating something people want and rapid growth, they have signed up significant brands as customers.

So if you unpack those two key elements that I mentioned earlier, which is make something people want and how do you grow really fast? So we've had to do both.

The quote highlights the dual focus on developing a desirable product and achieving fast growth, which has led to successful brand partnerships.

• Surrounding oneself with smart people is a key takeaway from YC.
• The YC experience provides a culture of paying it forward, with support from other YC founders in the form of advice and structured thinking.

About know, I think it's all about surrounding yourself with really smart people.

This quote reflects on the importance of being in a community of intelligent individuals, which is a significant benefit of the YC experience.

• Selling to large companies presents challenges due to their entrenched processes and skepticism about efficiency gains.
• Handholding and demonstrating the potential benefits are necessary but difficult, especially with large enterprise customers.
• Success in this area is evidenced by signing up many Fortune 500 companies.

So that's the part that's probably a bigger challenge. But we have succeeded at that, considering that we've signed up many of the Fortune 500 in the last 90 days.

The quote acknowledges the challenge of convincing large companies to adopt new solutions but also highlights the speaker's success in overcoming this obstacle.

• The AI and messaging sector has seen explosive growth.
• The speaker has previously discussed building the "Turing test for money," which relates to interactions between businesses and consumers.

The transcript ends abruptly, so no further context or quote is provided for this theme.## Customer Service Challenges

• The volume of customer service calls is immense, with 270 billion calls made last year.
• Handling customer service calls is costly for businesses and often results in poor consumer experiences.
• High percentages of customers experience negative outcomes during service calls: 85% are put on hold, 67% hang up, and 48% feel unhelped.

"Last year there were about 270,000,000,000 customer service phone calls made. That's very expensive for businesses to handle. And as a result, the consumer experience is also not that great because businesses are not doing a great job at this. And it's actually so bad that 85% of customers were put on hold, 67% hung up and 48% felt unhelped."

The quote highlights the inefficiency and poor consumer satisfaction associated with traditional phone-based customer service, emphasizing the need for better solutions.

• Message AI is developing human-assisted AI to improve customer service interactions.
• This technology enables consumers to text with businesses as they would with friends, combining AI with human staff for constant availability.
• AI could be a catalyst for commerce, allowing consumers to transact with businesses through messaging.

"So at message AI, what we've been building with human assisted AI would really fix this problem. So consumers can now text with businesses just the way they text with their friends and brands."

The quote explains how Message AI's technology aims to revolutionize customer service by making it more conversational and accessible through texting, leveraging AI to enhance the experience.

• The top four messaging apps have a user base of 3 billion, surpassing social media.
• Messaging is the most frequent activity on smartphones, with China leading in transactional messaging.
• Messaging is particularly effective for infrequently used services, where users may not want to download multiple apps or learn new interfaces.
• Creating conversations that lead to commerce is crucial, with the conversation aspect being key to success.

"Yeah, if we look at just the top four messaging apps, there are 3 billion people there now, so that's bigger than all of social put together. Long story short, it's the top habit on the smartphone and transacting on messaging, we are seeing that happen in China."

This quote describes the vast potential of messaging apps as platforms for transactions, especially given their large user base and habitual use on smartphones.

• Personalization is essential for brands to engage in meaningful conversations with consumers.
• AI enables brands to add value to consumers' lives in a personal way.
• Sony Pictures' use of AI for the movie "Goosebumps" resulted in 860 hours of unique conversations, demonstrating the personalization capabilities of AI.

"It's all about adding value to people's lives. So brands that are able to add value to people's lives would be able to have amazing conversations, and they have to do it in a way that is obviously personal. That's where AI comes in."

The quote emphasizes the importance of personalization in customer interactions and how AI can facilitate unique and valuable conversations between brands and consumers.

• Bots powered by real AI can provide immediate personalization, understanding consumer needs and context in real time.
• AI allows for massively personalized interactions at scale without the need for human involvement in every interaction.

"I would say if you have real AI powering these bots with machine learning and some elements of deep learning, it's that immediate personalization by understanding what the consumer needs, understanding their real time context."

This quote suggests that the true innovation of AI-powered bots lies in their ability to personalize interactions instantly and contextually, a feature that was not possible before at scale without human assistance.

• Message AI uses human-assisted AI, which varies depending on the brand's needs.
• Human involvement can range from training the AI to work unsupervised to actively intervening in interactions.
• Brands can choose the level of human involvement based on their preferences and the AI's capabilities.

"Yeah, so our AI is also human assisted AI. Those were the two things that we made a decision early on."

The quote explains the company's strategic decision to incorporate human assistance into their AI platform to enable rapid problem-solving and market deployment.

• The main concern is not the growth of messaging apps but the possibility of a "messaging gold rush" where businesses fail to understand customer context or leverage human-assisted AI correctly.
• The improper implementation of messaging interfaces could undermine the potential benefits of conversational interfaces.

"What concerns me is not what could prevent growth, but what I call the possible messaging gold rush. And if businesses try to build messaging apps without truly understanding real-time customer context, or without leveraging human assisted AI for scale and efficiency, that's where it would not deliver on the promise of conversational interfaces."

This quote reveals concerns about the rush to adopt messaging apps without proper consideration of customer context and the effective use of AI, which could lead to suboptimal outcomes.

• Humans can indeed interact meaningfully with bots, as evidenced by the millions of conversations on the Message AI platform.

"Do humans truly interact with bots on a meaningful level? In some cases, oh, yes."

The quote confirms that meaningful interactions between humans and bots are possible, suggesting that the technology can successfully engage users.## Personalization of AI Interaction

• Consumers have developed a personal connection with AI, leading to instances where they apologize for using bad language.
• This level of interaction indicates a significant shift in how AI is perceived by users, not just as a tool but as a conversational partner.

There were some consumers that would use bad words or the AI would block them. They would come back and say, hey, I'm sorry, I didn't know you would stop talking to me. I didn't mean to say that.

The quote highlights a specific example of users interacting with AI on a personal level, demonstrating the human-like relationship some consumers are forming with AI technology.

• Puneet Kumar has not read many blogs or newsletters in recent months due to time constraints.
• He praises Paul Graham's essays as a valuable resource for startup wisdom, noting he has read each multiple times.

To be honest, the last few months, I haven't had an opportunity to read many of the amazing blogs and newsletters. But I have to say, one of the best resources for startup wisdom are Paul Graham's essays.

Puneet Kumar expresses his admiration for Paul Graham's essays on startup wisdom, indicating their importance and influence despite his busy schedule.

• Meeting intelligent and amazing people has been a highlight for Puneet Kumar on his journey.
• Learning from the experiences and stories of successful individuals at dinners has been insightful, especially regarding the challenges faced.

I would say the people I've had the good fortune of meeting the most amazing people on this journey, some of the smartest ones on the planet.

Puneet Kumar reflects on the significance of the connections and interactions he has made with remarkable individuals throughout his professional journey.

• Dinners with speakers have provided Puneet Kumar with valuable insights into the realities of success and the challenges along the way.
• He has favorites among these speakers but chooses not to disclose them.

Yeah, so, again, some of the smartest people on the planet, but what we heard, which was amazing, were their stories on how it's all not a walk in the park or it's not like everything goes great.

The quote captures Puneet Kumar's appreciation for the candid stories shared by accomplished individuals at networking dinners, which include both successes and difficulties.

• Puneet Kumar favors meditation over digital productivity tools to maintain sanity and achieve goals in a fast-paced environment.
• He recommends finding a practitioner or using online resources for those interested in starting meditation.

Well, I would say my favorite productivity tool is not a digital one. It's meditation.

This quote emphasizes the importance Puneet Kumar places on meditation as a means of maintaining focus and productivity in his work life.

• Puneet Kumar's favorite books are "Zero to One" by Peter Thiel and "The Power of Now" by Ekatol, which he believes offer a blend of practical and spiritual guidance.
• He values the question posed by Thiel about holding truths that few people agree with, which has been relevant to his own experience with Message AI.

I would say Peter Thiel's zero to one. The question that he puts forward. What important truths do few people agree with you on?

Puneet Kumar discusses how the question from Peter Thiel's book has influenced his thinking and approach to challenges, particularly in the context of his work with Message AI.

• Puneet Kumar is excited about the future role of AI in various aspects of life and the potential for creating value.
• He aspires to follow Steve Jobs' advice to "stay hungry, stay foolish" over the next five years.

Well, I think we are living in really exciting times. In five years, we would see AI play an integral part in various aspects of our life.

The quote conveys Puneet Kumar's anticipation for the future impact of AI and his eagerness to contribute to this evolving landscape through his work.

• Harry Stebings expresses gratitude to Puneet Kumar for sharing his journey and to those who facilitated the interview.
• He promotes the 20 Minute VC newsletter and podcast, as well as Wonder Capital's investment platform.

And I'd like to say a huge thank you to punit for giving up his time today to be on the show.

Harry Stebings thanks Puneet Kumar for participating in the podcast, highlighting the value of the insights shared during the conversation.