AI, VC Funding and the Boring Things That Kill Startups | Bertram Richards & Beverley Knoesen

speaker-0: Mm-hmm. speaker-1: Hi everybody, thank you so much for joining me for another episode of the DK show. Today I'm super excited to be joined by my old, very old mentor. Hello again after so many years.

And your lovely wife, Beverly Knoeson. Beverly think it's I haven't seen you in years and it's lovely to see you both. Welcome to the show. speaker-2: Thank you so much for having us.

speaker-1: So Bertram, you and I go way back you know, way, way back to when I've just started Shift One in the very, very early days of my incubation by the bandwidth barn, which I think later on became Cape IT Initiative and I don't know what it is now, but they did great work back in the day teaching me how to be an entrepreneur. And you played a pivotal role there in helping me get started. So I'm very, very excited to have you On the core. speaker-0: Thanks Million.

It's exciting. Good to see you after all these years. speaker-1: Yeah. Yeah.

speaker-0: We have been keeping track and speaker-1: Bertram is a a great networker. Yes. And you just never he never lets you go and he's always got you on the end of his fishing rod. And you know, when you start going too far from Bertram he'll say, Hey, I'm still here thinking about you and he always keeps contact and you s you do that really, really well.

So thanks for always staying in touch. But so I wanted to pick your brain around, you know, the state of VC, valuations, incubation, you know, the tech arena. So Beverly, before we start, I always ask my my audiences to introduce themselves because I mean Beverly, your background as a as an IT executive and your space your your experience in the tech space and Bertram coaching, you know, over a hundred startups in the startup space, twenty-eight years, you guys are real heavyweights in the South African African startup space and in the tech space.

So there's so much that I want you to share with my audiences today. But before we start, Bertram, this is your opportunity to for your elevator pitch, if I met you in a in an elevator, what would you say? Who are you and why should I care? speaker-0: Great.

so firstly I'm a management consultant down at the base roots of it. I have been a hands-on tech, absorbed the tech, I was graduating chemistry, then business science, then technology, and seen the power of tech through my own life experiences. in the nineties, positioning of tech, taking a look at what influenced it. And then later on the development and coaching on the direction of tech.

So I'm a technology coach in the positioning of tech, the infrastructure insights from art lessons as well as keen listening to a global audience in terms of what's impacting them. And then looking for the success factors. So that voice, that board member that you can't afford through the traditional means, but through personal engagements and networks, that that's why speaker-1: If I could take a stab at it. Bertram helps companies leverage or grow or get to the next stage of VC funding.

Right? That's is that your sweet spot? That's where I've got you in my head. Yeah.

speaker-0: The sweet spot is making sure that I guess look VCs come with different sets of rules. But in their due diligence, in their expectations, there's a maturity in product, in persona, in the jockey, in the environment that they're looking for. It's operational, it's product, right? They cover the financial aspects.

They understand finance, they understand valuation, right? But They have criteria that the system must work, the positioning must work, the market must exist. It's sort of what we used to always used to say, it's the boring things that will kill the business. The fundamentals that kill the business.

And you don't realize just how many things as an owner you're actually juggling until you either something breaks, you never thought about it, or you are filtered out of an opportunity. something that you've just never thought about. And it could be because of lack of experience, lack of networks. So that speaker-1: So that's a reason to to call you.

Call Bertram. Exactly. And Beverly, your elevator pitch, if I met you in a lift, what would you say? speaker-2: So I'm so old I learned to code in DOS.

So I've kind of lived the entire life cycle of tech and IT, primarily from a corporate perspective. So seeing and implementing tech into corporate environments. So I understand scale. and the risk that goes with not having processes properly documented, not having your code properly documented, and then also succession planning.

So as you're scaling, you need to understand where your weak points are and at what point you either need to recruit or need to change something in your operational process to cope with that scale. So I'm the boring person who comes and says, is your documentation, where are your processes and where is your succession plan? speaker-1: Yes, exactly. Like Bertram said, it's those boring things that kill the business.

So Beverly, let's get the elephant out of the room. with AI and its agentic rise. what do you what is what are some of the biggest pitfalls that you see in founders and tech startups have in terms of their technology and and everybody's coding so quickly now, like at the blink of an eye. Software that took months, years and years and hundreds of thousands of dollars to develop and now someone's developing in their mother's basement, you know.

And so what are the what are the pitfalls that you are seeing in some of the cautionary tales that you would like to share with tech startups that are software as a service or using technology heavily with the rise of AI? speaker-2: I think the biggest challenge I'm seeing it isn't an immediate one. We're only going to start experiencing it in the next few years, where people are cutting out the middle management. So they're keeping their...

tech developers who because they are able to use the GenTech AI so well and deliver the solution so quickly. But there's going to be a talent bottleneck in the next few years where the junior developers aren't coming in. Everyone is a senior developer and those guys are either going to go off and start their own businesses or they're going to retire very young if they've made enough money. And there isn't that pipeline of junior developers who are getting experience now who are going to be ready in five or six years time to fill that gap when the guys who are really executing very very well at the moment when they move on to pastures new we're going to have a big talent gap in that space, there's no one coming through.

So it's not something immediate that I'm seeing, it's something down the line that isn't being catered for at the moment. speaker-1: And do you think people aren't coming through because everyone thinks AI is doing that and I don't want to study that anymore because y AI is gonna take my job and so that's the problem that we have now, right? speaker-2: No, it's not even that. It's just they're studying.

So they're still studying coding, but there aren't those entry level jobs for them. speaker-1: right. speaker-2: Fewer and fewer, So basically you need to start your own business the minute you step out of college. In fact, you need to start it while you're in college, while you're learning and understanding which of those products you can commercialize so that you have something to step into to sustain yourself.

speaker-1: That's interesting 'cause that brings us back to Bertram's skill because I was having this conversation with somebody yesterday. you're a young person, you've developed some you went on lovable.dev and you coded some amazing thing, or you've got basic dev skills and you coded something and you worked out all the back end and you've got this piece of software, but you have no idea about branding and marketing and social media and you have no networks and you don't know about positioning and you d haven't done any competitor analysis and So people are able to code something quickly, but they still need marketing one on one to get their product going.

They still need to understand the big ecosystem. And Bertram, this is where you come in, 'cause that's your your forte's looking at the whole world, right? speaker-0: It is and you know one of the things around technology solutions, right, and and the whole starting point of what people may forget about is there's an emotional maturity that comes with identifying a problem, being entrusted with the solution capabilities to say you're going to be the go-to to build something, right?

And then handling the implementation and the change management because the human pace of learning, of problem solving, has not grown to that accelerated point. What we're seeing with the young guys is their frustrations, they have great tech, the code is there, they've aired it. The ability to sell it, the ability to position it. The ability to understand the human factor because of with implementation comes change, right?

Often frustrates them. We have some brilliant mathematicians, brand you know, and brilliant coders going in and they are frustrated because the guys aren't getting them. Yet if we go through just the whole history of the tech that we've lived and worked through, right? There are human elements that still need to be considered, and that is different.

That you cannot run in an age, and then suddenly everybody's just in that space. So the technology is at one space, but the human adoption is in the other space. Then when you're looking at the success factors for implementation, like the networking, the marketing positioning, you can run a clawed analysis at the end. But if you cannot relate to the human factors that you're engaging with.

Sure, a solution that's a machine to machine. Very different, right? There's still a CIO, speaker-1: Yeah. speaker-0: there's still an FD involved, there's still a consumer.

So speaker-1: Yeah, the reason I'm laughing is I'm I'm in B2B, everything I do is B2B, we have a few B2C clients, and we talk about C to C, consumer to consumer, you know, and we talk about G to C which is government to consumer. And now we're talking about to which is just direct to AI to AI, cut out the human, like what the heck world are we living in? speaker-0: Absolutely so building ecosystem around around yourself, the success, the team, the people factor, right? Is still a consideration.

speaker-1: Well let's talk about funding because funding's a big big factor, I think, obviously with startups and and that. So I've I've always had a bit of a pr problem with the South African VC space in it, but it has been years since I last was involved in that in any in any state. But in my days, you'd get a million rand for twenty-five percent of the business and very, very aggressive VC funders who very quickly Take all the value and equity away from the shareholder and just demotivate them as the shares decrease, their shareholding decreases, So has that changed or is that still do you find prevalent?

speaker-0: So expectations, what we have found is a specific profile. So VCs have got their sector preferences. You may have noticed fintech, that particular VC, on millions of transactions, hyperscalers absolutely love it. The ability to scale and see mass adoption.

FinTech dominated, it's been dominating the past fifteen years and it still dominates. More than forty percent of VCs would go into fintech. And then speaker-1: Mm. speaker-0: you get the commercialization of what we generally used to see as CSI targets, health, education, wellness.

But certain markets have been able to successfully commercialize it. And so you're now seeing a change, but the expectation is not the same. VCs have managed the expectations. Expecting a ten X on a fintech would be a normal point.

The growth in the mental wellness space has been significant. Launch Africa pointed that out to us, just in terms of their own portfolio at the moment. in tech as a sector. I mean, you know, we've we've been around and just seen it grow.

And so you've had this love hat relationship with commercializing education and parents especially like Amst. But then we had listed entities in South Africa like Ciro, the commercial universities that are out there who declare Prince Profits every year. And so as those environments become very sub commercially successful in the traditional format. The expectation now from the BCs is a solution that can deliver, if not 10x, 5x, but it's speaker-1: Hmm.

speaker-0: a very different mindset that's required there. Again, I think you you've you raised that. If your growth is dependent on consumer behavior as opposed to machine to machine, with just a click and a tap, very different. We've seen tourism and tour tech as well coming through as a growing sector.

But again, different continents have got different sets of rules and expectations as well. And literally going through the profiles of the VCs, we can see there's logistics tech, each vertical in terms of business sector, has its own profile. of technology investment and expectations. It just gives techies options.

We find actually tech speaker-1: Yeah. speaker-0: is where their passion is. And so they don't have to go and and become product developers or fintech where they have no passion, they don't understand the immersion process for problem solving, why it is painful for them. speaker-1: Yeah.

speaker-0: Those VCs are now standing up and going That's my portfolio. speaker-1: And Beverly, from a technology point of view, I mean you've been deeply immersed in the technology for s a very long time and obviously AI has always been well for the last twenty five years there's been AI's been on the cards and but I think with the rise of the large language models and the agentic AI. Let's not talk about the now. Let's talk about the future.

What do you see as being the the big changes that are gonna come in the future in the technology space. speaker-2: god. If I knew what that was, I wouldn't be sitting here chatting to you. speaker-1: Yeah.

speaker-2: I'd be a digital nomad swanning around on a beach in Thailand somew- speaker-1: In Ibiza. speaker-2: No, exactly. speaker-1: So so there's obviously two scenarios. There's doom and gloom, AI takes a lot of jobs, the AI holocaust, and I'm betting on that scenario I tend to be a bit pessimistic.

And then there's the symbiotic relationship, hopefully not parasitic relationship, but where we work together with technology and jobs just change and change rapidly. Yes. And everybody has to just sort of up you know, like adapt and and keep up. But I think for companies that are so so maybe the let me tailor the question a little bit more.

So companies who have built a legacy technology platform that is non AI, you know, are you seeing them rewriting everything in AI? Because I know that the AI code comes with a l like it's like forty five pages long when a normal developer would be a paragraph, right? So what are some of your thoughts there? F speak to the person, 'cause I have a lot of clients in the software as a service space, so speak to my software as a service clients who've spent twenty five years building this proprietary technology that these legacy systems.

What are you seeing? speaker-2: So what's really nice and it's back to a point Bertram made earlier is humans kind of lag in their adoption. So you have the AI companies trumpeting any little success, some really big successes, some little successes that they really make a huge rah rah rah. But if you look at typical medium to large size enterprises, they're a lot slower to adopt.

So they'll be putting their, dipping their toes in and out, making sure that when they do make an investment. It's not something that's going to fall over in six, 18 months time. They really need to be very risk averse and very cautious around how they adopt and which technology they adopt. we're starting to hear stories of companies developing in, for example, OpenAI.

And then when they move their solution onto a different hosting platform, they discover that AWS have decided that OpenAI, for example, are no longer their partner of choice, but they're now going with Anthropic. And your entire ecosystem now needs to change because you're on AWS. chosen a different partner. So people are becoming a lot more cautious in which partners they use and how they're going to introduce AI into their enterprises.

speaker-1: And what about security risks, everyone's connected Claude MCPs to their laptops and we're hearing of Claude hacking here and hacking there and hacking everywhere. Hack hakyo here, hack your daughter and what C Dot? What was that up? Kill your head, kill your dot and C Dot or whatever.

speaker-2: They are showing our age. That man was so creepy, he's like AI. speaker-1: So there was some creepiness in our childhood that we don't question. But so I and also for me, like you've got these young tech entrepreneurs arising and they haven't invested in the security and you go out and you know, find their software as a service platform which you merrily input all your details and then and then they and then they're hacked.

So I think maybe yeah, Beverly, that's a question for you and then I'll revert back to Bertram for his insights there. speaker-2: Yeah, it's like I always say, don't rely on somebody else to look after your security. Make sure that you are fully aware of what trends are happening, who's hacking who, and then make sure either your outsourced service provider or your own internal team are on top of what's happening and make sure that they get skilled up to be able to deal with the hacking threat and it's just you've got to constantly keep your staff trained and up to date with latest technologies.

Security is not something to not spend money on anymore. You really do need to be looking at that and making sure you're spending a decent amount of money to make sure your teams and your environment is properly secure. speaker-1: Yeah. Agreed.

And Bertram? speaker-0: Hmm. you know, I've I've been fortunate to to take quite a deep dive into this particular fact I guess either because I'm the risk or the risky one that's playing a bit more around with it. The anthropic risk reports that was published last month and the Chat GBT NFE pointed to case studies of the abuse and I think the extent to which the creative entrepreneurs make use of the AI from an abusive technique supply.

By their nature, the criminal nature, if the individuals have that criminal nature, they're essentially digitizing their criminal behavior. And these tools have become an extension of that. It's 178 odd pages of case studies and files that give you an insight from a global perspective of how the AI abuse could happen. But from an opportunity point as well, and we've been fortunate myself remember we've been in this space with thirty years.

The value of data in the nineties our data was really linear maths, bit of algorithms, Excel, we wouldn't do the brain. And that was straight forecasting processes. Then went into what we call route optimization and decision support. Moving forward now, 20 plus years, and the availability of these tools, you suddenly see what the impact of clean data is.

Your data's moved from a digital record of what you had done. Remember for the auditors you had to hold on to your files for five years? Yeah. SARS, okay.

That now became the library on which the AI tools have been taught and built. So your digital twin literally exists in this virtual world. Some with intention you didn't know you were potentially filing. You may recall I keep every one of my Gmail accounts and have every email since two thousand and four.

What Gemini is now able to do is full an entire behavior pattern and create me digitally off the back of what I thought was just an email repository. We're seeing it in the medical industry, we're seeing at Kluituskia, all those yellow folders sitting in archives. Suddenly material sitting upon which there's insights. So each person has a data mine of their own and some unfortunately it's much more extensive.

And you can use it for good and for bad. Again, looking at the functionality of the different AI tools, whether you're in government, whether it's in private use. how you ask it to engage and mine and what you want it to reproduce, whether it's on prompt or someone else's prompt, can turn it into good or to bad. We we had a couple of weeks back engaged with the traditional banking sector.

You you may remember with the investments as well. Banking sector refused to acknowledge code as an asset. It's not a bankable asset, right? It's not something you can put into account, and the guys go, bricks and mortar.

Here's your bar of gold, that's worth $1,000. Here's your 49 lines of code, that's five dollars. That still is a challenge in the traditional banking sector. Your code is not collateral for finance.

However, a clean data set has a value. Or is someone with an AI tool, LM will pay for that. And so suddenly we have static data that has got a library, and once it's viewed very differently, you're now sitting with the digital asset. It doesn't have to do anything.

Again you're gonna have the right stuff. And I think that's the bit's that's also that we've changed. speaker-1: Interesting. I like your fresh take on that.

I think that's you've both shared a lot of insights and really good points, some food for thought. In closing, Beverly, anything you want to leave the readers, the listeners and the watchers with of the show? speaker-2: I think just don't be afraid of AI. It's been around in some way, shape or form for decades.

It's been on your phone every time you use a filter on your phone. That's a form of AI. So definitely embrace it. But I would recommend embracing with caution.

Be... fully aware of what it is that you're using and why you're using it before you go in boots and all. speaker-1: Good, thank you, agreed. And Bertram?

speaker-0: I think for the technology and the entrepreneurs sitting out there, the opportunities are much, much broader. We sit with 20% of the global population on the continent. We sit with so little data center infrastructure based here that it's not even listed on a AI data center directory. The tools and the adoption on the continent.

through the use of the engagement of telecoms is likely a great first step, and that's a a note from Zach George. you remember Zach. Right. speaker-1: Yeah.

speaker-0: So we're sitting with 1.5 billion people. We're sitting with the need for technology and tools as well as infrastructure. Okay.

And So that builds whether we're going to make use of satellites, whether we're going to be doing fiber rollouts and infrastructure. There's opportunities for hardware. There's opportunities for network guys sitting out there. There are opportunities for firmware developers.

We can either adopt and customize. Understand what sovereignty is, geopolitical aspects has played more into tech in the past four years than ever before. And so if you're going to be innovating, understand what your exposure is. Because you cannot have an entire technology stack and opportunity taken away through a policy change.

And that is how that if if we're ever going to be looking at risks coming through, it's that particular factor. Local opportunities, local insights before you scale it, but also understand sovereignty when you're actually busy boarding as well. and that's gonna give you a peace of mind, whether you're hardware, software, firmware. speaker-1: Amazing.

Good good insights, good thoughts. Thank you so much, Beverly and Bertram from Maven Solutions. Yeah, thank you. That's been amazing.

And everyone, you're so nice to see you. I'll share Beverly and Bertram's details in the contact details in the descriptions below. Please reach out to them. they are available for consulting and they would love to hear from you.

And thank you again to all my listeners, viewers, and readers. Please like, comment, subscribe, and drop some comments. Let us know any questions that you might have in this space or any thoughts that you would like to share. Thank you again, everybody, and have a lovely day.

Bye-bye. speaker-0: Thanks million.