I am old enough to have made many venture capital mistakes and to see good luck occasionally bounce my way. One thing I’ve learned throughout is this: what are the smartest technical people with the highest opportunity costs most excited about?

VC is notorious for hyping up trends since firms are paid a lot of fees to raise and deploy capital. Some of those trends are fleeting. Remember B2B, B2C, SOI, open source, Bluetooth, etc.? New firms and dedicated funds were created to address those trends that in the end did not become sustainable, stand-alone categories.

The trends that matter are platform shifts that create fundamental change and second-order and third-order effects that unleash opportunity. I think we’re living in one now with AI.

I recently was on an HBS faculty research trip in SF and Silicon Valley. We met with various alumni: VCs (Sutter Hill, Kleiner Perkins, etc.), those at companies doing cutting-edge work (OpenAI, Scale AI, Google Deep Mind, Salesforce, Applied Intuition, etc.), and a former student with the Golden State Warriors. I walked away feeling that the shift is real. Many, many really smart people with high opportunity costs have gone all-in on AI. And, compelling customer use cases are appearing. I did not see that with the first crypto wave.

I learned much and am still processing the implications for the two courses that I help teach, but here are some early thoughts for my students:

1. If you’re looking to get into tech or tech VC, move to the Bay Area. I’ve long given that advice to students: over decades, I’ve seen more founders and VCs pick up and move west. “It’s as good as they say” and “I wish I had moved earlier” are very common refrains from VC friends. I predict that trend will only continue. There will be outcomes in other regions, but you really cannot beat the Bay Area ecosystem’s breadth and depth. And, nearly all of the critical AI companies are in the Bay Area, meaning AI talent, experience, and future startups will be concentrated there. I do not know how other countries catch up, frankly. (N.B.: Among business schools, HBS has the most alumni as founders or VCs in every major metro area in the USA, and that includes the Bay Area.)
2. If you’re a joiner, look for companies that are already $50M+ of revenue. Companies just starting out rarely need an MBA’s skills: they’re looking for deep spikes and technical skills. But, once they’ve achieved PMF and need to scale, the MBA skill set is valuable. Being a joiner (e.g., classmate Sheryl Sandberg at Google and Facebook) can be extremely fulfilling and lucrative. There’s no shame in joining a rocket ship and helping it scale.
3. If you’re looking to start something in AI, partner with an MS/MBA. One event the school organized was that we met with 25 HBS alumni founders. I was struck by how many MS/MBAs were in the mix. It makes sense, as we are early in the AI wave, during which raw technology is still being built. Over time, generalist types can start their own companies, but the tech needs to be more established first.
4. Look for second-order and third-order effects. Once a tech layer is established and standardized, there will be even more opportunities. Example: once the network layer was created and settled, this gave rise to the Internet, which then created opportunities for many more technical businesses (e.g., banner ads and search) and many that were not technical innovations (e.g., Airbnb). I am not smart enough to know what AI will unleash, but I do feel that there will be subsequent waves of innovation. All this will create opportunity. And, the farther away way we are from the technical Big Bang, the more those opportunities will be less technical and therefore a good fit for MBAs.
5. The most valuable skill sets: creating, building, selling, and growing. The first two skills are early-stage: you start a company, define a product hypothesis, and iterate to PMF. The latter two skills are later-stage: selling to customers at scale and then growing through organic means (new products, new regions) or inorganic ones (buying smaller companies or partnering with larger companies). As you look for an internship or job, think about the skill sets that companies value most and then articulate what you can do to add value to those employers. G&A functions are increasingly nice-to-have. The most powerful areas in companies are those that create revenues, either by building products or selling them.

Hope this helps!

Many thanks to Hilary Caplan Somorjai and Allie Ciechanover for organizing an amazing itinerary!