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- [00:00]
Indiana University Announcer
Indiana University is shaping the future of healthcare. Advancing discoveries that become treatments for Alzheimer's, obesity and cancer, and training the providers trusted to deliver them. See how IU solves. What's next iu. Edu Impact.
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Podcast/Radio Announcer
Bloomberg Audio Studios Podcasts, Radio News.
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Interviewer
Hello. I'm so excited to speak to Konstantin and of course, it's all about AI. He also had a great conversation with Jensen Huang of Nvidia. Constantine, thank you for joining us. I know everyone's talking about AI. Everyone's talking about also this deal between Open Air and amd. Your first thoughts?
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Constantine Buller
Well, it's an exciting new partnership. We were with Jensen Huang this morning, and the relationship between Nvidia and OpenAI goes back a long way. In fact, we're talking about how their very first factory, the one was delivered to OpenAI back in 2016 to Elon Musk, actually, at the Sequoia offices. And so it's just a reminder that all of this AI revolution is powered by really impressive hardware.
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Interviewer
You're very focused on agentic AI. Where are the biggest opportunities and why? Agent AI, of course.
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Constantine Buller
So agentic AI is AI that doesn't just make a decision, it actually takes an action on it. And we are now in the moment where it's really starting to make a difference in workflows. I'll give a couple examples. One is actually for AI security. We're investors in a company called Expo that started off trying to find vulnerabilities in software and now ranks number one in the world on global vulnerability leaderboards for finding vulnerabilities and fixing them for the good guys. Another example.
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Interviewer
How do you know it's the good guys?
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Constantine Buller
Well, we only actually service companies that have shown that it is that we're finding vulnerabilities on their own platforms. So it's for companies that have been approved and gone through the vetting.
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Interviewer
And the second. And you were saying, yes, way to do it.
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Constantine Buller
So another example is our portfolio company, Harvey, which is actually helping lawyers to actually complete their work faster. They're now at over 700 customers in 58 countries. But just to make it very real, my sister is a general counsel at a tech company and she texted me a couple weekends ago and she said, harvey just saved my Friday night. And I said, what do you mean? She said, well, I got a contract for my CEO. Usually it would take three, three and a half hours to turn it over used. Harvey got it done in 30 minutes. And so that's us actually feeling AI and agent OK, finishing workflows in the real world.
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Interviewer
But Constantine, I mean, things are getting competitive, right? So how do you back the right company?
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Constantine Buller
So we always look at the team at the end of the day, especially for early stage investing. We're looking for the founders that are going to endure and persist through ups and downs. Now we know that AI is going to have its moments of excitement, but also moments of difficulty. And we look at the long duration and in the long duration we think it's undervalued still.
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Interviewer
What are the other impacts that actually this could have on the economy? But also, you know, there's so much spend. How are you sure that whatever you spend on AI you get the returns in a reasonable time frame?
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Constantine Buller
Sure. So we're here at the Citadel securities conference with a lot of leading investors and they're all talking about what's the return on that AI? And that's what 2026 is going to be all about. How do we actually see that return? And there's a few engines that are going to power that. The first is new monetization strategies. To date, most of the monetization of AI has been subscription revenue. You pay for a subscription and you get a product. Well, there's a couple more ways that companies are now monetizing. One is through usage. So the more you use the product, the more you pay, kind of like a real service. The other is actually through E commerce. So last week OpenAI announced that you can actually complete entire purchases on chatbots. So you can actually do research for the product you want to buy and buy it through Shopify or Etsy completely on the AI platform. That's something we're excited about. We wrote a thesis that this is going to become an important way to do commerce. And we believe that will continue to be. The other one is new modalities. So everybody has used AI for text based modalities. You talk to the AI and it responds to you in text. We've seen Voice hit the mainstream. Voice has gotten so good that with companies like Sierra, which is a portfolio company that does customer support, you can have entire conversations with AI flawlessly. Or companies like Listen Labs does market research incredibly well with Voice. And then in 2026, we'll see video start to really take center stage. We obviously have seen Sora and Nano Banana and those perform incredibly well. It's just the beginning for them.
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Interviewer
Talk to me a little bit about the partnership that you have with Citadel Securities. I mean, this was a large amount of money from Sequoia and Citadel. Is this a blueprint of more of these kind of agreements, of course.
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Constantine Buller
So we were the first outside investors in citadel securities. In 2021. We're proud to have invested $1 billion in the business. And a lot of the reason we invested in the company was the technology platform that they operate on and have built. And this technology platform has changed an entire industry. So if you think back 30, 40 years, the way that securities were traded was really in person services. Two people would find a price and then transact in person. And they especially Ken, had a vision of the future in which you're going to actually be able to discover that price using algorithms, predictive algorithms, and then actually be able to complete that digitally. And we've actually seen that become the way the vast majority of equities are now traded digitally. And it's just the beginning. So only 8% of fixed income is traded digitally. There's another 92% to go. We see big expanding markets. And frankly, it also reminds us of the revolution and the agentic revolution, where it starts off manual and then you get AI to make a prediction, and then like an agent, you actually complete it digitally.
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Interviewer
But, I mean, this is basically an industry being disrupted, right? Is there still one industry that we haven't thought about that you're looking at that will be significantly disrupted?
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Constantine Buller
There always is. There always is an industry for disruption, but also for innovation. You know, we want to make people's lives better. I think an industry that could have a lot of innovation and would help everyone is health care. Why do I say that? Well, there's a lot of spend in health care. It's incredibly important, and we're not all getting the services that we could. So my wife is a surgeon in health care. She has from her health system hundreds of patients that could come through and get those procedures. She still spends a lot of time writing notes and actually doing tasks that an AI can help with. In fact, now an AI is helping. So her health system, she uses open evidence, which is now used by 40% of physicians. She uses a bridge, which does transcription, and that actually helps her complete that busy work faster so she can spend more time with patients. So I'm very hopeful that one of the areas that AI helps with is healthcare.
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Interviewer
Constantine, thank you so much for your time today. That's Constantine Buller there from Sequoia Hiscock.
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Podcast/Radio Announcer
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