The investment strategy for the Madrona Venture Group is described by the maxim “day one for the long run.” This has been the firm’s guiding principle in its funding for artificial intelligence startups and it has shaped its view of intelligent applications as well.

“At Madrona, we’ve been investing in AI startups in one way, shape or form for over a decade now,” said Soma Somasegar (pictured, right), managing director at Madrona Venture Group. “Way back in 2015 is when we first coined this terminology, intelligent applications. We think that every application moving forward is going to be an intelligent application. By extension, if an application is no longer an intelligent application or doesn’t think about how to become an intelligent application, we think it’s on its way to death.”

Somasegar spoke with theCUBE research analysts Dave Vellante (left) and George Gilbert (center), in the latest episode of “The Road to Intelligent Data Apps,” theCUBE’s continuing conversation about the Sixth Data Platform, an emerging framework where the leading vendors are Databricks, Snowflake, AWS, Azure and Google. They discussed how the current startup environment is fostering a new wave of development for intelligent apps.

Madrona Venture Group predicts value capture

In Madrona Venture Group’s view of the AI world, users are thinking about the technology in terms of whether it will be the catalyst for application generation or become an important subset of an existing use case.

“How do I think about AI right from the get-go so I have what we call a gen-native AI application?” Somasegar asked. “Or if I already have an application, I should quickly be thinking how I bake AI into my application, and we call it a gen-enhanced AI application. We think there are two categories here, people who are starting new and people who are trying to back fit AI into their existing application.”

Intelligent applications are poised to drive the next wave of innovation in much the same way that apps such as stock tracking, games and weather powered rapid adoption of smartphones over the past two decades, according to Somasegar.

“We firmly believe that a lot of the value capture is going to happen at the application layer,” he said. “We are already starting to see that. That’s where we think the vast majority of innovation is going to happen.”

As an example of how this process of innovation is already underway, Madrona Venture Group’s managing director cited his firm’s investment in Typeface Inc., a generative AI platform designed to supercharge enterprise content creation.

“Any content that you generate, whether it is sales content or marketing content or HR content … is automatically done in a multimodal way using your brand sensibilities and your voice so that it feels like it is from your enterprise,” Somasegar said. “That is what this company is doing; that’s happening today. People are thinking about enterprise use cases.”

AI reshapes programming for developers

Another example of how intelligent applications are reshaping the enterprise landscape can be found in Devin, a fully autonomous software bot created by Cognition AI Inc.

“Devin is coming out and saying, ‘Hey, today you have a software programmer, tomorrow, why don’t I give you the next software programmer who, by the way, is an AI agent, not a physical human being,’” Somasegar said. “To me it’s all about can AI be a companion to a human being, where all of the heavy lifting can be done more and more with AI and the human being is focused on the highest value tasks.”

AI is also reshaping the developer community, according to Somasegar. He spoke recently with a senior executive for a large financial services organization who described how the code completion tool GitHub Copilot was already having a productivity impact.

“GitHub Copilot in my mind really started the trend for how AI can come into play in a development environment,” Somasegar said. “He said they’ve seen across the board at least a 20% improvement in productivity. He said, ‘Because of the productivity, we are now thinking about what can we do more for our customers because we’ve got this additional bandwidth.’”

As intelligent applications drive productivity gains, there remains a question around when the rest of supporting infrastructure will catch up with advances in AI adoption. By virtue of its position to fund technology startups, Madrona Venture Group is beginning to see this new wave on the horizon, according to Somasegar.

“Usually, you see a tremendous amount of technology innovation and then compliance and security and privacy,” he said. “All of these things try to catch up. I would say in the last year or two there’s been a lot of new startups that are coming up in the AI governance and AI compliance space.”

Here is the complete conversation, part of the “Road to Intelligent Data Apps” series:

Photo: SiliconANGLE