AI Is Rewriting Software Economics. Venture Investors Who Miss This Will Back the Wrong Companies
Mike Volpi, a general partner at Hanabi Capital, said the venture capital industry is clinging to outdated assumptions about how software gets built and how much it costs to build it. That's a problem for anyone writing checks.
AI has fundamentally altered the cost structure of software development. Volpi said investors who don't grasp this shift will make poor bets. "If you get stuck with the old way of doing it, you're probably gonna invest in the wrong companies," he said.
For product development professionals, this matters because it changes how companies should be built, valued, and staffed. The economics that worked two years ago no longer apply.
Technical Fluency Is Now Table Stakes
Venture investors aren't the only ones who need to understand AI's technical foundations. Product developers do too.
Volpi said effective collaboration in AI-focused companies requires more than surface-level knowledge. "You gotta have a foundation like how does it work, why does it work, what are their flaws," he said.
This means understanding semiconductors, GPUs versus CPUs, memory bandwidth, and how these constraints affect what's actually possible to build. Developers who can discuss these topics with engineers and investors make better decisions about what to prioritize.
For product teams, this knowledge gap often shows up in roadmap decisions. Teams that don't understand the technical constraints of AI systems tend to over-promise on timelines and capabilities.
Consider taking time to build this foundation. AI for Product Managers courses can help product development professionals understand how AI changes the core assumptions of software development.
Company Valuations Are Becoming Untethered From Traditional Stages
The venture capital industry has long divided investments into seed, Series A, Series B, and so on. Each stage had expected valuations and return profiles.
That framework is breaking down. Volpi said opportunity size now matters more than stage. "I could invest in a company at 10,000,000,000 in valuation and three years later it could be worth 380,000,000,000," he said.
This affects how product teams should think about their company's trajectory. Traditional stage-based thinking assumes linear growth. The AI era is producing non-linear outcomes.
Brand Matters More When Founders Are Your Customer
In venture capital, the entrepreneur is the customer. The firm's brand determines whether founders will even take a meeting.
Volpi said assessing a company's financial fundamentals is straightforward. Building relationships with founders is the harder part, and reputation is what opens doors. "Anybody can do is just look at the math and see what it looks like," he said.
For product developers, this principle applies differently but still holds. Your company's brand affects how customers perceive your product's value, even before they use it. A Mercedes Benz doesn't have to prove it's reliable-the brand does that work.
Branding Has Shifted From Sponsorships to Personal References
Traditional venture marketing relied on conference sponsorships and visible brand placement. That's become less effective.
Transparency and social networks have changed how brand gets conveyed. Volpi said it now moves "person by person, reference by reference" rather than through top-down marketing. "It's less about did I sponsor this conference or is my banner over here," he said.
For product teams, this means your brand is built through what actual users say about your product, not through your marketing spend. This has real implications for go-to-market strategy.
What This Means for Product Development
Three practical takeaways for product developers:
- Build technical fluency in AI fundamentals. This isn't optional anymore. AI Coding Courses can help you understand how AI changes development practices.
- Question inherited assumptions about how software should be built. The playbook that worked in the pre-AI era may be actively wrong now.
- Invest in your company's reputation through genuine work and user advocacy, not marketing tactics. That's where brand value lives in a transparent world.
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