"Turpentine VC" | Venture Capital and Investing · Erik Torenberg

E67: Defense Tech’s Rise with 8VC’s Alex Kolicich

·54 min·3 clips

SpaceX, Palantir, and Anduril made defense startups feel like a real path.

1. Turpentine VC centers on Alex Kolesich's H1 2024 report about AI, defense, and venture markets. 2. Molly O'Shea hosts Alex Kolesich, a founding partner at 8VC who also worked at Formation8, Mithril Capital, Clarium, Palantir, and Google. 3. The episode asks where AI value will land, who gets paid, and why defense has become a major venture category. 4. Alex says AI is a phase shift where winners and losers are decided early, citing Satya Nadella's view that the first two to three years matter most. 5. He breaks AI into hardware, foundation models, infrastructure, tooling, applications, and AI-enabled services. 6. Alex says no one knows whether the base model layer, the platform layer, the app layer, or customers will capture the margin. 7. He says incumbent software systems may capture much of the value because the data and workflows already live there. 8. Alex compares base-model competition to a memory manufacturer, with sustained annual investment needed to stay on the frontier. 9. He says OpenAI's GPT-4o1 is an improvement, but expects competitors to catch up within six months. 10. Alex warns that companies like Inflection and Adept can miss one model cycle and effectively lose the market. 11. He says software and AI pricing now split into a normal public market and an expensive private market. 12. Alex cites software trading around 6.5x forward revenue and says some AI companies raise at 100x to 200x revenue. 13. He says AI-first startups should raise every three to four months while capital is available. 14. Alex uses Eugene Kleiner's line, "the time to take a tart is when it is being passed," to describe the current fundraising window. 15. He says the AI capability gap is still real because products like Text-to-SQL and other production deployments are not reliable enough. 16. Alex argues the near-term opportunity is man-machine symbiosis, where humans supervise systems that automate about 80% of the work. 17. He places the market below the trough of disillusionment in the Gartner hype cycle and says the peak of inflated expectations is closer. 18. Alex says defense now looks different because Ukraine showed drones, battlefield awareness, and precision strikes changing warfare. 19. The conversation is direct, analytical, and heavily focused on venture economics rather than storytelling. 20. Listeners interested in AI pricing, defense startups, and venture strategy will get the most from it.

Listen to the show on

Apple Podcasts Spotify

Play clips from this episode More from "Turpentine VC" | Venture Capital and Investing