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Alexa’s Product Market Fit Problem, Good Companies are Bad Investments & New Conversation with Madrona Ventures

1/ Alexa Has a Product Market Fit Problem & the Leadership Knows It.

For long I have kept saying Alexa had a false PMF, I told the same to Todd Bishop (author of the above post) a while back in our podcast about big tech. I think we are finally seeing that the top leadership realize this and are making changes. Microsoft was quick to realize Cortana was a failure and didn’t make huge investments in it in the first place.

Now that the Alexa correction is underway what is next for voice assistants?

I am bearish on pure voice assistants (like Alexa) and bullish on augmented voice assistants that will come along with AR/VR devices (like the one Iron man has). I also think we are about to see personal voice assistants to have a new break out movement because of generative AI. If you are building LLMs its cheap & easy to launch a voice for the LLM, imaging Grok AI (Elon’s sarcastic responding LLM) having a voice. I believe we will see more of these example coming out because its now cheaper to launch and these new assistants will not work standalone but will have all the capabilities that AI agents will have.

Exciting times ahead.

2/ Good Companies Can Become Bad Investments

This so the story of late stage private investing in last 4-5 years. The pendulum swung too far into the side of founders and investors didn’t negotiate their positions to target a return.

It was a function too much capital chasing too few ideas.

The result is late stage investments into good companies have turned into bad investments.

Some examples:

Instacart: Early stage investors made great returns while late stage investors didn’t.

Canva: Early stage investors will make great returns while late stage investors won’t.

Open Sea: Early stage investors made great returns only as a function of late stage over valuation.

Even great companies at some valuation don’t make good investments and its a lesson for the next cycle.

3/ My Conversation With Madrona Venture’s Managing Director Matt McIlwain

If you know about Seattle VC ecosystem you know about Madrona (investors in Amazon, Redfin, Snowflake, UiPath & more). I had the amazing opportunity to pick Matt’s brain on all things venture. You can check out my full conversation with Matt below.